NASDAQ In The Zone

Price in the NASDAQ futures is nearing the zone where we saw the large breakout last week.  Last Wednesday, just before ramping higher, the market printed a well-defined low volume cave surrounding 3360.  To my eye, if the market accepts price below this level (spends an hour or more below and builds volume-at-price) then the sentiment introduced to the market last week is gone, and we should adjust accordingly.

Keep in mind however, that a mere breach of this level is not your tell.  Instead price needs to sustain below for a reasonable duration.  A VPOC establishment below the reference point would support the case for lower prices even further.

Up above we have a wonderful confluence of low volume and value area high at 3390.  This is the sellers’ stronghold, a level they defended well yesterday after thrusting us lower.  Trade above these levels would represent a bull victory as the market attempts to regain balance.

Overnight we were fairly balanced with a bit of sell flow which was faded this morning.  In determining whether the bulls can sustain control of this aged trend, I want to see the velocity of the market slow.  If we can consolidate sideways a bit slower then yesterday’s violent indecision, then that slowing of the market in and of itself would be constructive.

I have highlighted the above price levels, as well as drawn out a few normal scenarios on the following market profile charts.  Remember, normal does not always mean right, and a different type of day development would be another clue: