Thursday, March 18, 2010

Midday Briefing for March 18th: Transition Pattern

Note how we made a momentum low with heavy selling in the 10:45 AM bar (left arrow); we then made price lows over the next hour (middle arrows) on lower volume and volume at the market bid. With selling pressure drying up in the 12 N bar, we then saw buyers become bolder and lift offers, taking us back to VWAP. This transition pattern sets up across multiple time frames and makes for a nice trade when trapped traders need to exit their positions.