LongTerm Vwaps converge near All-time Highs: Significant?
מעודכן
Interesting confluence:
Today (Aug 2 2019) an interesting confluence. The market corrected back down to the last intermediate swing low on June 26 (horizontal blue line at 14.50 level), which also is the date I started the long-term Swing Low Vwap (blue dotted line in chart around 2970 level).
Note how that line is at the same level as the yellow dotted line which is taken from the most recent swing high (a week or so ago).
Possibly what we have here is a correction to the last low to flush out the weak longs, and then, given how close we are to a confluence in Vwap long-term swing high and swing low values (not far below all-time highs, and not far above Friday's close), that, unless the market starts selling off below these recent support levels and making lower lows, more likely given the bounce on Friday at that key support level, the market will rather retrace to where these two long term vwap levels are and then again retest those all-time highs before (finally) charging up to new heights, if not fairly soon, then after waffling around a bit in September and early October, which is typical seasonal behavior.
After which we could well blow past 3,000 and get up to 3600 (+20%) by years's end if indeed support is consolidating around current levels, and these levels are so close to historic highs. This support is indicated by the confluence of both swing high and swing low vwaps, the bounce from the swing low making a possible intermediate-term double bottom and indicating continued support at these levels by stronger players, and the fact that we are doing all this so close to historic highs. You would typically expect to see lots of resistance at these levels, but instead it is looking a bit more like a correction into support.
Of course, too soon to say, but when the two vwap levels come together, it usually means that the current story is over, and a new one is about to begin. It's early August and seasonally the market tends to climb into late August, so if I had to bet, I'd assume that at the least, we will soon be consolidating support at last week's lows and then going back up to test all-time highs.
Also note that the POV on the longer-term Volume Profile (daily sessions is bright red dash line, screen-length sessions is the dark red line around the 3019 level, very close to all-time highs). Now the longer-term one is about to flip down to join the Friday one IF the market stays down there, but then that would make it a good base from which to jump. If the market immediately rises on Monday and never moves the longer-term POV down but it stays up there, then it will become a magnet level for the market and a rapid move back up there becomes more and more likely. So that will be interesting to watch on Monday ESPECIALLY if the market corrects quickly back up to the convergence point of the two Vwap Swing High and Low levels around 2970.
Today (Aug 2 2019) an interesting confluence. The market corrected back down to the last intermediate swing low on June 26 (horizontal blue line at 14.50 level), which also is the date I started the long-term Swing Low Vwap (blue dotted line in chart around 2970 level).
Note how that line is at the same level as the yellow dotted line which is taken from the most recent swing high (a week or so ago).
Possibly what we have here is a correction to the last low to flush out the weak longs, and then, given how close we are to a confluence in Vwap long-term swing high and swing low values (not far below all-time highs, and not far above Friday's close), that, unless the market starts selling off below these recent support levels and making lower lows, more likely given the bounce on Friday at that key support level, the market will rather retrace to where these two long term vwap levels are and then again retest those all-time highs before (finally) charging up to new heights, if not fairly soon, then after waffling around a bit in September and early October, which is typical seasonal behavior.
After which we could well blow past 3,000 and get up to 3600 (+20%) by years's end if indeed support is consolidating around current levels, and these levels are so close to historic highs. This support is indicated by the confluence of both swing high and swing low vwaps, the bounce from the swing low making a possible intermediate-term double bottom and indicating continued support at these levels by stronger players, and the fact that we are doing all this so close to historic highs. You would typically expect to see lots of resistance at these levels, but instead it is looking a bit more like a correction into support.
Of course, too soon to say, but when the two vwap levels come together, it usually means that the current story is over, and a new one is about to begin. It's early August and seasonally the market tends to climb into late August, so if I had to bet, I'd assume that at the least, we will soon be consolidating support at last week's lows and then going back up to test all-time highs.
Also note that the POV on the longer-term Volume Profile (daily sessions is bright red dash line, screen-length sessions is the dark red line around the 3019 level, very close to all-time highs). Now the longer-term one is about to flip down to join the Friday one IF the market stays down there, but then that would make it a good base from which to jump. If the market immediately rises on Monday and never moves the longer-term POV down but it stays up there, then it will become a magnet level for the market and a rapid move back up there becomes more and more likely. So that will be interesting to watch on Monday ESPECIALLY if the market corrects quickly back up to the convergence point of the two Vwap Swing High and Low levels around 2970.
הערה
Clearly not a great short-term call, but the market hasn't exactly cratered yet - at least on Daily-Weekly timeframes- and we'll see if it can stage rally back up to the old highs. Not over til fat lady sings.הערה
A bit hard to see on this Daily ES1 chart, but the long-term vwaps from last major swing highs and lows basically went through the middle of the recent congestion area / trading range which was broken through finally today.
To the upside as I 'predicted'. The yellow dotted upper line is around 2902 and the blue dotted lower swing line is around 2888, a narrow band essentially.
The orange trend line is based on the closes, whereas the lower green trend line is based on the lows. The two together show how support has been found every time the market probes lower - also bullish behavior.
Best guess: market will at least test the old highs before going into a seasonal correction period in Sept-Oct, maybe November. The China negotiations are very important. If the Chinese try to wait out the Trump Presidency, it will drag all markets down, but there is little threat to Trump out there right now, realistically speaking (though of course one never knows). The Predict-it betting market, though - usually right - has Trump being the nominee for sure, but a Democract winning the White House. However, it's a long time from the election right now. If it stays that way through until both conventions, then Trump will most likely lose. But that's only a little less than a year away so...
In any case, this thread is about using the long-term vwaps. I find they help provide perspective and when on a shorter term chart (like 5 mins) the market is around those levels, I pay attention to how things shake out, whether they are close to current support or resistance levels using other things like VWAP, or trend lines or Support/Resistance price levels.....
הערה
PS In fact, if you look carefully at this chart, you can see that yesterday's low was right at the level of the upper LTVwap price, and the close the day before was also at that level having dipped below during the session (almost but not quite to the lower LTVwap price, also bullish) but then bouncing back up to close just above. This meant (to me) that these levels are of interest to pay attention to and, sure enough, the market rallied from the upper LTVwap price base, and is now out of the trading range and clearly will test the old highs any day now (if not today-tomorrow).הערה
Friday 13 September: the Aug 6th low and the previous swing high, both of their LT Vwaps are converging.
As the market hesitates at lifetime highs.
Very simple: either there is a convincing break-through which leads to a sustained new wave upwards, or the high holds and we go back to these Long Term Vwap areas (plus of course various other Fibonaccia or previous Swing Low support areas).
If I had to bet, I'd bet on a correction now on a seasonal basis. If the market correct down into mid October and the support levels hold, then probably the next test of the highs will break through and we could have a 10%+ run higher into May 2020.
הערה
The Dec chart shows a slightly different picture. The market touched the LT Vwaps which are higher than the Sep contract....
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