On Monday the Nasdaq futures approach our upside target, the High Volume Node and the UVA 2 level at 4523. The NQ was buoyed by the mildly bullish action in the Dow and S&P 500.
As noted yesterday, however, the uber-enthusiasm at the open last Thursday left us with a 20-point unfilled gap at 4424-4444. Since the Nasdaq has recently been in gap fill mode, the question on my mind is “when will the gap hunt begin?”
The typical scenario for such a reversal begins with a strong and sudden up-move. Like magicians, markets need to get everyone looking the wrong way. I would be watching carefully around the Upper Value Area at 4523. If that level is surpassed and holds on a retest, then watch for Weekly R1 at 4540 (not shown on the chart).
A Note on Volume Profile
The histogram on the left side of the chart shows the volume distribution in the Nasdaq futures for different periods of time. Key support and resistance levels are indicated by the peaks and troughs. If you would like to receive a primer on using Volume Profile, please click here: www.daytradingpsychology.com/contact
