Morning Update for Subscribers
Capitulation or Continuation? Market in Full Liquidation Mode
📢 Morning Update for Subscribers
🔍 Capitulation or Continuation? Market in Full Liquidation Mode
📊 Open Pivots
🔹 $ES: 5295
🔹 $NQ: 18171
The market continued its high-velocity selloff following yesterday’s confirmed close below $ES 5443, a level we’ve been monitoring as the final ledge before a breakdown.
We warned that this could trigger a major liquidation event, and sure enough:
$ES dropped over 200 points, tagging 5210 overnight.
$NQ plunged to 17800, hitting our next major downside target.
Now the question is: Is this exhaustion or just the midpoint of an even larger move down?
🔑 Key Levels to Watch Today
Upside Resistance Zones
$ES: 5324 → 5354 → 5415
$NQ: 18370 → 18580 → 18900
These are first zones where trapped shorts may take profits or new sellers step back in.
Downside Targets
$ES: 5210 → 5150 → psychological 5000
$NQ: 17800 → 17450 → 17000
If these levels break, expect acceleration due to low liquidity and algorithmic chase behavior.
🧠 Market Education: Low Liquidity Regimes & Algo Behavior
We’re seeing shades of March 2020 (Covid crash):
Thin books
Rapid repricing
Algorithms seizing control of momentum
What Happens in Low Liquidity Environments:
Books thin out: There’s no depth. Small market orders move the tape 5–10 points instantly.
Liquidity-hunting algorithms take over: These algos "sniff" for order flow, fill gaps rapidly, and cause massive overreactions.
Whipsaws become common: 100-point rallies, followed by 150-point dumps in minutes.
What You Must Know:
Stop losses are more critical than ever.
Limit order fills are unreliable.
Slippage increases.
Emotions spike.
This is not an environment for inexperienced or undercapitalized traders. If you’re unsure, sit out and observe. Cash is a position.
📌 Today’s Trading Scenarios
Scenario 1: Dead Cat Bounce → Continuation Lower
If price fails to hold above 5295 ($ES) or 18171 ($NQ), we likely see a quick sell program reactivate.
Watch for failed rallies into 5324–5354 to re-engage shorts.
Scenario 2: Short Squeeze Relief Rally
If buyers defend above 5295/18171 and break through 5354/18370, this can trigger a nasty short squeeze.
These often start midday and accelerate into the close.
Don’t chase. Wait for retests or exhaustion candles near key zones.
Scenario 3: Wild Chop
This regime favors chop and trap games.
Watch for false breakdowns and failed breakouts that reverse in seconds.
📌 Final Thoughts – Stay Nimble, Stay Alive
The algo games are on. This isn’t normal price action.
Focus on 1 or 2 setups and manage risk with precision.
Trade lighter size. Shorter duration. Use tight stops.
Don’t fade momentum blindly—it’s moving too fast.
We’re likely near some form of short-term bottom, but longer-term structure still points to lower until proven otherwise.
Let’s stay sharp and trade level-to-level.
#MorningUpdate #ES_F #NQ_F #AuctionTheory #VolatilityAlert #TradeSafe