Navigating Post-Holiday Waters

In the wake of Christmas festivities, the trading desks came to life on the day after Christmas, offering an environment marked by subdued volatility yet ripe with opportunities for strategic plays. Let's dive into the narrative of the day, exploring the decision-making process and lessons learned in the realm of post-holiday trading.

Setting the Stage: A Slow Morning Unfolds

Before the market opened, the scene was set with price and PPMs meandering sideways to an upward trajectory. Absent the reach of significant R1 or S1 levels on the daily chart, and with hourly PPMs holding their positive slope, anticipation for substantial market movements was tempered.

Market Open: A Spike and Strategic Pause

As the clock struck 9:30, the market opened with a notable spike above moving averages. All three PPMs signaled intent, cutting through both of their derivatives, while PPM 1 and 2 reclaimed their positive slopes. PPM 3 projected above its positive slope, crafting a demand line. However, caution prevailed, and no immediate trade was executed, considering the PPMs' marginal positivity at 0.05.

Strategic Short: Navigating the Rejection off R1

Around 10:30, a strategic decision was made to short the open rally, entering at 4817 as price rejected off R1 on the daily chart. PPM 1 and 2 began rolling over, testing their positive slope, while PPM 3 maintained its positive slope. The expectation was a test of the 40MA, validated as price dipped to 4813.

Missed Opportunities at the 40MA

Price made a second and third attempt at the 40MA around 12:35 and again around lunchtime at 4716, but profits were not taken as PPM 1 and 2 were not projecting to surpass both derivatives. A missed opportunity in hindsight, emphasizing the importance of adhering to the trading plan.

Market Dynamics: Post-Holiday Volatility and Demand Line Insights

As anticipated, the volatility dwindled with the approach of lunchtime, prompting a test off the 40MA/demand line. An insight surfaced that the 40MA proved to be a robust demand line, evidenced by its ability to hold a positive slope throughout its PPM 3. Price cut through my stop loss at 4821.

Final Act: An Upward Drift and a Lesson in Review

The day unfolded with price drifting higher, touching R2 at 4833, and subsequently, facing a rejection back through the 10 and 21MA. A final lesson emerged as the 40MA at 4824 became a testing ground, showcasing its strength as a demand line.



In retrospect, the day after Christmas, though slow, provided valuable insights into market dynamics and the significance of key technical levels. As we reflect on each decision and outcome, may these experiences contribute to a deeper understanding and sharper skills in navigating the ever-evolving landscape of trading. Until the next trading adventure unfolds, happy trading!

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