Friday Review

Friday's strong employment report led to slightly higher prices though most of the impact was seen in bonds and the dollar.

The early spike higher above the bull/bear zone into IR was not accompanied by strong momentum and broad market strength. Instead there was a clear bearish divergence in the market internals.

A liquidation break then followed down into the prior day's VPOC. The IS zone should have been adjusted from the prior day to include that which was a poor miss on my part.

All the action happened in the first hour and that would've been a good time to call it a day as was painfully slow for the remainder of the session.

The merged profiles below include all trade following the sell-off from the all time high on July 27th.

A value area has formed between 2468-2474, with 73 trading the most volume (VPOC) and 72.75 where most time has spent (POC).

Until we see a break outside of value and rejection on retest with accompanying directional force (i.e. volume, strong internals etc.), trade is likely to stay choppy. 

We still have a poor all time high with no sign of excess yet. 

The daily chart below has monthly volume profiles showing the progressive shift higher in value, currently holding above the prior month's VPOC at 68. Once that area breaks a lot of late to the party longs will be trapped offside which has potential for a strong liquidation break. A move higher will continue to trap and squeeze the latest shorts until we get buyers giving up.

Next weeks key US data is highlighted underneath.

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