On 12/21/23 the S&P 500 (SPX) had retraced a Fibonacci .618 of the prior days micro crash. Late trading day momentum signaled the SPX could continue to rally and possibly peak in the 4,758 to 4,762 area. Also noted that if that resistance zone was broken, the SPX could rally to just below its 12/20/23 high.
The 15 – minute S&P 500 – E-Mini – March 2024 (ES Mar – 24) chart courtesy of Ninja Trader shows what happened.
The Volume Profile method aligns market volume with price action. The volume clusters are like an attracting or repelling force. Price is drawn to or moves away from volume clusters. The widest volume cluster of the trading day is called “Point of Control” (POC), which could be strong support/resistance areas.
Early on the 12/22/23 SPX trading day price moved above 4,758 to 4,762 area which corresponded to the ES – Mar – 24 – volume cluster from 4,808 to 4,812.
The next significant volume cluster was the ES – Mar – 24 – POC of 4,822.75 made on 12/20/23 and just below the 12/20/23 high of the day.
On 12/22/23 the ES- Mar – 24 rally ended at 4,821.75 just one point below the 12/20/23 POC.
Also note the action near the end of the 12/22/23 trading session. Price plunged through the 12/22/23 POC at 4,806.00. Price then rallied back to the POC. For almost an hour the price struggled to go higher and failed, ultimately falling back below the POC.
This late day action implies more downside action on 12/26/23 which could be part of at least a multi – day decline.
To those that are celebrating the upcoming holiday. Merry Christmas!
To everyone, peace and goodwill!
Mark
Four Dimension Trading 