Futures trading is an essential aspect of the financial markets, providing traders with the ability to speculate on the future price of assets like commodities, stock indices, currencies, and others. Understanding market trends and key price levels is crucial for consistent long-term success.
Importance of taking an analytical approach
In a recent episode of NinjaTrader Live, Path Trading Partners Co-Founder Mike Arnold shared lessons learned from his extensive trading career and his unique insights into market conditions to help traders like you expand their skills. Mike’s analytical approach offers valuable perspectives for both seasoned traders and newcomers looking to navigate the complexities of today's futures markets.
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Topics discussed in this free livestream:
- ES and NQ technical analysis review for July and beyond
- Current key major market stock index futures support and resistance levels
- How the CBOE volatility index (VIX) can provide unique insights for traders
- Nuances of technical analysis and the evolution of trading technology
- Critical price levels to watch for in the current market
- Detailed breakdown of recent pricing market trends (e.g., moving averages, harmonic levels, institutional trading behaviors)
Better analysis, better trading decisions
Using technical analysis to help identify trend bias and key price levels is crucial to making better trading decisions. Popular indicators traders use every day include multi timeframe moving averages, retracement tools, floor trader pivots, and volume profiles.
Additionally, awareness of institutional trading behaviors and market conditions, like those indicated by the VIX, can provide insights into market risk, direction, and potential turning points. Overall, a thorough understanding of all these elements can help traders make better more informed decisions and navigate the daily uncertainty of futures trading.
Market Analysis and July Performance
- July market trends: Despite a promising start in July, the market saw a recent downturn, attributed to a lack of sustained committed momentum and widespread bearish bias sentiment, leading to a correction of more than 10%.
- Key levels to watch: For the September S&P futures, a daily close above 5,495 is crucial for a potential rally. Without this, the focus remains on possible lower prices.
Technical Analysis Insights
- Moving averages: Mike shows how he uses the 200 SMA, 8 EMA, 21 EMA, and 50 EMA to identify key resistance and support levels. He also employs harmonic resistance levels at 12.5% increments instead of traditional Fibonacci retracements.
- Support and resistance: The recent retest of the 200 SMA in the S&P 500 is significant. Key resistance levels include the 50% retracement at 5,420 and the 62.5% harmonic at 5,495.
Current Market Conditions
- Institutional influence: Institutional repositioning and selling pressure are evident, particularly in late trading sessions, perhaps indicating cautious behavior among larger players.
- Nasdaq performance: The Nasdaq shows substantial weakness, with key resistance around 18,600 and significant hurdles to overcome for a bullish move above 19,600.
Broader Market Implications
- VIX observations: The VIX's spike to 56 on Monday and its current level at 25 indicate bearish sentiment on the part of options market makers. A drop below 20 could signal a turnaround and a more sustained short-term rally.
- Divergence and fear levels: Mike discusses the concept of divergence in the VIX and how a second spike, or lack thereof, could confirm market bottoms.
Approach with caution
Mike emphasizes a cautious approach, focusing on technical indicators and market reactions to key levels. He remains wary of bullish moves without confirmation through sustained closes above critical resistance points.
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