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...That means either #1 we're only 1/2 way through the decline today or #2 everyone knew Draghi wouldn't do anything or #3 the market did not rally because of his remarks but because of something else.

 

How about #4. We still have the NFP tomorrow and the larger funds are waiting for it.

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goodoboy.. I told you there was a buyer at 50. Why would you put a stop above what we believe might be the natural buyer? Did you put your stop directly below what you thought was a pivot? I've found that in many markets, we will go out, touch just below the pivot and then reverse. We seen that with the sell off earlier today.. where we touch just above a prior high.

 

I believe in this case.. the equities buy programs kicked in just above the natural buyer. Of course, these patterns don't always setup in this way...

 

Yep, man o man. 53.50 was a bit high and should have waited a bit for retest of 51. that miss does not feel too good, came right to 1358 too.
Edited by Predictor

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Yes, I know what I mean. The risk was 2pts and the reward was potential 5pts. If my definition is wrong please correct me.

 

Actually your risk was 2.5 and your expected reward 4.5 ("long 1353.50, stop at 1351; target is 1358"). That's less than 2:1.

 

Db

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Goodoboy, I'm sure you will get a lot of opinions as everyone has on take on things. Db has his but I rarely/never measure by risk/reward or only basically. I am more concerned with the probability I will make money. I typically will use a large stop because I don't have time to think about where I should put my stop and I don't want to be distracted. I'll exit using my tape read when I feel that I'm more likely wrong then right.

 

I am also concerned with whether or not I can clear my positions. Even though I detected a seller at 52.50, I would not have taken that trade because I wasn't convinced I could clear lower.

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How about #4. We still have the NFP tomorrow and the larger funds are waiting for it.

 

Are you saying the larger funds are trying to get a head start and used the comments today from get a good start?

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Are you saying the larger funds are trying to get a head start and used the comments today from get a good start?

 

Nope. I'm saying the opposite - that they are waiting for the NFP so my expectation was that this day would not be a true trend day.

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Actually your risk was 2.5 and your expected reward 4.5 ("long 1353.50, stop at 1351; target is 1358"). That's less than 2:1.

 

Db

 

Thanks Db, its well noted. What typical risk reward do you use?

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Goodoboy, I'm sure you will get a lot of opinions as everyone has on take on things. Db has his but I rarely/never measure by risk/reward or only basically. I am more concerned with the probability I will make money. I typically will use a large stop because I don't have time to think about where I should put my stop and I don't want to be distracted. I'll exit using my tape read when I feel that I'm more likely wrong then right.

 

I am also concerned with whether or not I can clear my positions. Even though I detected a seller at 52.50, I would not have taken that trade because I wasn't convinced I could clear lower.

 

Thanks. Yes, everyone has their own way of doing things. I like to consider risk vs reward in my trades. It gives me a better idea on what I am looking for or I am just overreacting, chasing, or being undisciplined. If I don't know my target before I take the trade, then it goes against the method I am trying to build for myself.

 

I was using 3pt stop for a long time, now I am down to 2-2.5 stop. Still debating on this and really it depends on the situation.

 

As far as the trade I took, I was looking at 1351 as support, so taking the trade at 1352-1352.50 was initially my plan, but I didn't follow my plan and took it early. If I would have followed my plan from the start, I would have executed right (IMO). Lesson Learned.

 

And yes, I remember this 1350 area sometime ago.

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goodoboy.. I told you there was a buyer at 50. Why would you put a stop above what we believe might be the natural buyer? Did you put your stop directly below what you thought was a pivot? I've found that in many markets, we will go out, touch just below the pivot and then reverse. We seen that with the sell off earlier today.. where we touch just above a prior high.

 

I believe in this case.. the equities buy programs kicked in just above the natural buyer. Of course, these patterns don't always setup in this way...

 

Is it just me, or have anyone notice after a big down day like today, always at the end about 2:40-3:15, price action goes up.

 

Is this short covering or real buying?

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btw - if anyone is interested - Jim Dalton has some good webinars on the ES here - James Dalton Webinars | J Dalton Trading

 

In particular, the following webinars are excellent:

 

The Importance of Understanding Overnight Markets for Short-term Traders

SFO Magazine Webinar: Identifying Day Timeframe Trade Opportunities

 

And they are free too!

 

Thanks, I watch webinars all the time.

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What days like today do is make good money for those with a set plan and who know what they are looking at and it runs over those who don't really know and need time to decide what to do- or are just motivated into trading against their plan because those fruit machine lights are flashing.

 

You know right, I been in days like this before, where I am just chasing all over the darn place. Afterwards, I feel all tired.

 

I think that most new traders always have this feeling they are missing something. This is why, I took time out to build me method and road map to learning and trading. I feel it will relax me. I remember my co-worker and I first started trading ES, and we was all over the place on big days like this. :rofl: By the end of the day, we both had losses. LOL

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Is it just me, or have anyone notice after a big down day like today, always at the end about 2:40-3:15, price action goes up.

 

Is this short covering or real buying?

 

Open Interest might give you the answer to this question, but it's not something I've ever used, so I'm unsure of the granularity of it.

 

BlueHorseshoe

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Thanks Db, its well noted. What typical risk reward do you use?

 

I don't use any, consciously, but I've been doing this a very long time. Wyckoff (who is not necessarily pertinent to this thread), however, suggested that the R:R be at least 3:1. And traders have generally adhered to this for over a hundred years. Otherwise, unless you have a very high hit rate, you will over time lose. It's simple math.

 

The R:R, however, is irrelevant unless the risk is appropriately determined and the reward is realistic. In this case, the risk was below support, not above it. By entering so late, your "reward" would have to be at 65-66, minimum. If that is not realistic, don't take the trade.

 

While some pooh-pooh the R:R, it can help beginners avoid doing stupid things. For that alone, the calculation is worth doing.

 

Db

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I don't use any, consciously, but I've been doing this a very long time. Wyckoff (who is not necessarily pertinent to this thread), however, suggested that the R:R be at least 3:1. And traders have generally adhered to this for over a hundred years. Otherwise, unless you have a very high hit rate, you will over time lose. It's simple math.

 

The R:R, however, is irrelevant unless the risk is appropriately determined and the reward is realistic. In this case, the risk was below support, not above it. By entering so late, your "reward" would have to be at 65-66, minimum. If that is not realistic, don't take the trade.

 

While some pooh-pooh the R:R, it can help beginners avoid doing stupid things. For that alone, the calculation is worth doing.

 

Db

 

Thanks Db, I like the 3:1 ratio. For my case, I have to use risk vs reward (R:R) on each trade or taking the risk is just not worth it and makes more planned.

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Thanks Db, I like the 3:1 ratio. For my case, I have to use risk vs reward (R:R) on each trade or taking the risk is just not worth it and makes more planned.

 

Understand, however, that the risk need not have anything to do with stops, and whether the stop is "large" or "small" is not pertinent. One need not use stops at all. The risk is inherent in the trade (e.g., below support) and has nothing to do with how much risk one is willing to take. It's there whether or not the trader is willing to take any at all.

 

Likewise, the reward is inherent in the price movement, and pegging a particular price level as reward just to complete the calculation is pointless. The market couldn't care less. If there's no reasonable expectation that the reward level will actually be reached, the trader is just deluding himself.

 

Db

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I will jump on the "bash goodoboy" bandwagon (j/k goodoboy). I used to also get absolutely slaughtered on days like today. But here's what happened:

 

1) the market dropped before the open

2) the market moved up to a logical area of prior supply/resistance

3) the market sold off from there, and is near lows again

 

Structurally, days really don't get better than this. We have the 56-61 consolidation. Market broke up out of that. Showed its strength, pulled back to VWAP and top of 56-61 consolidation, and continued up. Consolidated, and fooled lots of people when it broke above yesterday's low. Double topped. Dropped, and is now channeling down.

 

So goodoboy, if today was tough--and I remember when it was hella, crazy, punch my monitor tough--it's because of something on your end, and it's not anything on your charts. You sold too early in the day because you didn't want to miss out when the market had already dropped 25 handles. Then you bought near the high (despite my warning about the 69 ;) ) but it was still a good buy as one more retest was a reasonable probability. Fortunately for you, it sounds like you actually may have made money.

 

Negotiator mentioned earlier, and I mentioned above, the structure. But all of this is stuff that is plain to see on the chart, and you can see the same things. I think what good traders do well though, is that they know the behavior of the market they are trading, and the general psychology of the traders participating. No one wants to miss out, so many will short the open, but the market didn't really confirm a short did it? And then they get pissed off, and they jump on the long bandwagon just at the top--just look at the 10:27 volume, it's plain to see. So, fear of missing out, "what ifs", "if onlys" are all over this chart today. All we have to do is recognize that, not be one of those people, and then take advantage and we can make some money. Negotiator helped me greatly with some of this stuff, so listen to him.

 

Thank you Josh,

 

I just got some time review the charts and re-read your message. What you wrote makes sense and that type of thinking sounds like me. As analyze the chart and re-think some situations, I could have easily made some mistakes as I was in the "i miss something" mode as well. Obviously, I need more practice and study of market behavior. Today, was a good day for learning, but it was after market close!

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Understand, however, that the risk need not have anything to do with stops, and whether the stop is "large" or "small" is not pertinent. One need not use stops at all. The risk is inherent in the trade (e.g., below support) and has nothing to do with how much risk one is willing to take. It's there whether or not the trader is willing to take any at all.

 

I don't agree that your risk is always below support in a long. You do not need any support or resistance level to play off.

 

Today, I was long just above the open. What I wanted to see going into the trade was the market stay above the open.

 

What happened was it ticked down through the open 2 ticks but the amount of contracts hitting the bid was trivial.

 

So - the price itself wasn't even important. There was a few hundred contracts 1 tick below the open and about 48 2 ticks below.

 

There's all sorts of reasons for staying in a trade but the last swing low/support on a long trade isn't the only way to play it/

 

Likewise, the reward is inherent in the price movement, and pegging a particular price level as reward just to complete the calculation is pointless. The market couldn't care less. If there's no reasonable expectation that the reward level will actually be reached, the trader is just deluding himself.

 

Db

 

On entry to a trade, reward is the one element you have least control/knowledge about. Sure - you can look @ the last swing high above if you enter on a pullback or pick another level but it's an unknown. You can only control risk, reward is down to management and luck.

 

I crapped out of the last portion of my long after the 10am news, in retrospect I could have gotten a lot more out of the trade. As it is, I have no 'fixed' reward.

 

In all of my trades, I have no clue what the R:R is when I enter. I might exit a trade after 2 ticks, it just depends how the action plays out.

 

I think the importance of R:R is overstated in the retail trading world myself.

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I don't agree that your risk is always below support in a long. You do not need any support or resistance level to play off.

 

Today, I was long just above the open. What I wanted to see going into the trade was the market stay above the open.

 

What happened was it ticked down through the open 2 ticks but the amount of contracts hitting the bid was trivial.

 

So - the price itself wasn't even important. There was a few hundred contracts 1 tick below the open and about 48 2 ticks below.

 

There's all sorts of reasons for staying in a trade but the last swing low/support on a long trade isn't the only way to play it/

 

 

 

On entry to a trade, reward is the one element you have least control/knowledge about. Sure - you can look @ the last swing high above if you enter on a pullback or pick another level but it's an unknown. You can only control risk, reward is down to management and luck.

 

I crapped out of the last portion of my long after the 10am news, in retrospect I could have gotten a lot more out of the trade. As it is, I have no 'fixed' reward.

 

In all of my trades, I have no clue what the R:R is when I enter. I might exit a trade after 2 ticks, it just depends how the action plays out.

 

I think the importance of R:R is overstated in the retail trading world myself.

 

1- Your risk is what you make it whilst you're in the trade, I agree. However, the important aspect is what the market will do relative to the market and not your trade. If your risk is max 2 pts say and you enter 2.5 pts above support (whether it be a level, ma, pp, fib, open, close or whatever you believe the market reacts to), then in many cases you're going to be exiting prematurely without giving the market a chance to reverse. If you think about it, if you didn't have a position then you might even be looking to enter the market at this point for the same reason.

 

2- Unless you have no targets at all, the taking of your reward can be controlled in exactly the same way as your risk. You can't control whether on any specific trade your target or stop get hit - the market does that for you. Now this isn't to say that you should always get out at your max stop or target and not before. I think it's important to understand that when you enter a trade it's good to have an idea of market potential. Otherwise you'll end up taking lots of well controlled losses buying highs and selling lows - and that wouldn't be good :doh:

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I do agree that you shouldn't buy if you don't think the trade has potential to move up some. Still, the market will do whatever it will do. You can only control your risk and then do what you can to take some profits off the table.

 

I could put on a 2 point stop, look @ a monthly chart and say "all looks fine up to 1417" and set myself a huge target. Wouldn't do me a lot of good. Be a fine R:R though.

 

Of course, this is a silly example but then so is the concept of having a fixed R:R because the rewards side is only potential where the risk side is not. The risk side for most is is an absolute maximum risk, albeit with the chance to get out for less loss.

 

The reward side is a little different, the market will do whatever it wants to do. You only know reward after the event.

 

I do understand having space above in a long and limiting downside, I just think that berating someone on a forum because of some arbitrary minimum 1:2 (or whatever) ratio is a bit unfair tbh.

 

[/rant]

 

BTW - there's a guy on another forum who posts his trades daily - his historical R:R is .67 and he's quite profitable.

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In terms of my own trades, my default setting is as follows:

 

Initial stop : 4/5 ticks

Initial Target 1 : 4 ticks

Initial Target 2 : 8 ticks

Initial Target 3 : 12 ticks but this is managed out

 

With such a small stop, I cannot chase moves. What I will do on volatile days is to widen these stops/targets as I did yesterday.

 

In terms of the trade, let's take the example of a 5 contract trade

 

T1 - 3 contracts

T2 - 1 contract

T3 - 1 contract

 

When I get to my target 1, I move stop to break even MOMENTARILY. I have hit my T1 price but am waiting for a fill. At that point I set the stop to b/e whilst waiting for the fill. If I don't get filled & it comes back - I exit. If it gets filled, I move the stop back out of the way.

 

Once filled on T1

- I banked $150

- I am long 2 contracts, 4 ticks above my entry price

- My break even point on this trade is now 6 ticks below my entry price (2 contracts * 6 ticks = $150 banked).

- This means that at the time T1 is hit - my break even price is 10 ticks below, even though the market only moved up 4 ticks

- I now have a lot of breathing room

 

So - as long as I enter in a position where I think I have a good chance of getting those initial 4 ticks, I end up in a fairly stress free trade.

 

I am sure someone mathematically inclined can 'prove' to me that this is a terrible way to trade. Still, it's a very comfortable way to trade. It suits me.

 

The thing is though - I have absolutely no idea what all this means in terms of R:R...

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Is it just me, or have anyone notice after a big down day like today, always at the end about 2:40-3:15, price action goes up.

 

Is this short covering or real buying?

 

Short covering. And responsive buying at the lows.

 

I mentioned earlier in my post above that the larger players (funds) were unlikely to take positions in advance of the NFP (today). Without the longer terms traders - the market will behave in a responsive manner like this move which was an opportunity to buy at lower prices.

 

True trend days (down) do not rally into the close but close near the lows as the MOC orders are dumping the offside positions between 4 and 4:15 EDT.

 

What none of the Market Profile traders mentioned around here is that 1348.50 was the MONTHLY VPOC and this was a test of it.

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I don't agree that your risk is always below support in a long. You do not need any support or resistance level to play off.

 

Note that I said "The risk is inherent in the trade (e.g., below support) and has nothing to do with how much risk one is willing to take", "e.g." meaning "for example". Risk is not of course always anywhere.

 

The point is that the risk and the reward are determined by the market not the trader, and certainly not by how much the trader is willing to lose. The market couldn't care less how much the trader is willing to lose.

 

As to the trader with an R:R of .67, sure, if his hit rate is high enough. But unless you've seen him trade over an extended number of trades in real time and/or you have an audited brokerage statement, don't believe everything (anything) you read.

 

Db

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Risk is only "below support" according to the way you look at the markets, though.

 

If I don't recognize your version of 'support', then there is no reason for me to consider that the cut-off point.

 

So - without understanding the way someone looks at the market, presuming that the next support level down is relevant is a little leap.

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Risk is only "below support" according to the way you look at the markets, though.

 

If I don't recognize your version of 'support', then there is no reason for me to consider that the cut-off point.

 

So - without understanding the way someone looks at the market, presuming that the next support level down is relevant is a little leap.

 

As I said, using support as the risk level was an example. One can determine the risk however one chooses. But the risk level in the market is more pertinent than a risk level manufactured in one's head.

 

Db

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    • Date: 1st April 2025.   Will Gold’s Rally Hold Strong as New Trade Tariffs Take Effect Tomorrow?   Gold continues to increase in value for a sixth consecutive day and is trading more than 17% higher in 2025. Amid fear of higher inflation, a recession and the tariffs war escalating investors continue to invest into Gold pushing demand higher. The trade policy from April 2nd onwards continues to be a key factor for the whole market. Can Gold maintain its upward trend? Trade Policy From Tomorrow Onwards Starting as soon as tomorrow, a 25% tariff will be imposed on all passenger cars imported into the United States. While this White House policy is anticipated to negatively affect European industrial performance, it will also lead to higher transportation and maintenance costs for everyday American taxpayers. The negative impact expected on both the EU and US is one of the reasons investors continue to buy Gold. Additionally, last month, President Donald Trump announced reciprocal sanctions against any trade partners that impose import restrictions on US goods. Furthermore, tariffs on products from Canada and the EU could increase even more if they attempt to coordinate a response. Overall, investors continue to worry that new trade barriers will prompt retaliatory measures, particularly from China, the Eurozone, and Japan. Any retaliation is likely to escalate the trade conflict and prompt another reaction from the US. Experts at Goldman Sachs and other investment banks warn that this will lead to rising inflation and unemployment. They also caution that it could effectively halt economic growth in the US.   XAUUSD 1-Hour Chart   The Weakness In The US Dollar Another factor which is allowing the price of XAUUSD to increase in value is the US Dollar which has been unable to maintain any bullish momentum. Despite last week’s Core PCE Price Index rising to its highest level since February 2024, the US Dollar has been unable to see any significant rise in value. Due to the US Dollar and Gold's inverse correlation, the price of Gold is benefiting from the Dollar weakness. Investors worry that new trade barriers will prompt retaliatory measures from China, the Eurozone, and Japan, potentially escalating the conflict. Experts at The Goldman Sachs Group Inc. believe that such actions by the US administration will drive rising inflation and unemployment while effectively halting economic growth in the country. Can Gold Maintain Momentum? When it comes to technical analysis, the price of Gold is not trading at a price where oscillators are indicating the instrument is overbought. The Relative Strength Index currently trades at 68.88, outside of the overbought area, since Gold’s price fell 0.65% during this morning’s session. However, even with this decline, the price still remains 0.40% higher than the day’s open price. In terms of fundamental analysis, there continues to be plenty of factors indicating the price could continue to rise. However, the price movement of the week will also partially depend on the employment data from the US. The US is due to release the JOLTS Job Vacancies for February this afternoon, the ADP Non-Farm Employment Change tomorrow, and the NFP Change and Unemployment Rate on Friday. If all data reads higher than expectations, investors may look to sell to lock in profits at the high price. Key Takeaway Points: Gold’s Rally Continues – Up 17% in 2025 as investors seek safety from inflation, recession fears, and trade tensions. Trade War Impact – New US tariffs and potential retaliation from China, the EU, and Japan drive uncertainty, boosting Gold demand. Weak US Dollar – The Dollar’s struggle supports Gold’s rise due to their inverse correlation. Gold’s Outlook – Uptrend may continue, but US jobs data could trigger profit-taking. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date: 31st March 2025.   Trump Confirms Tariffs on All Countries, Sending Stocks Lower.   The NASDAQ continues to trade lower due to the US confirming the latest tariffs will be on all countries. In addition to this, bearish volatility also is largely due to the higher inflation data from Friday. The NASDAQ declines to its lowest price since September 11th 2024. Core PCE Price Index - Inflation Increases Again! The PCE Price Index read 2.5% aligning with expert forecasts not triggering any alarm bells. However, the Core PCE Price Index rose from 0.3% to 0.4% MoM and from 2.7% to 2.8% YoY, signalling growing inflationary pressure. This increases the likelihood that the Federal Reserve will maintain elevated interest rates for an extended period. The NASDAQ fell 2.60% due to the higher inflation reading which is known to pressure the stock market due to pressure on consumer demand and a more hawkish Federal Reserve. Boston Fed President Susan Collins recently commented that tariffs could drive up inflation, though the long-term impact remains uncertain. She told journalists that a short-term spike is the most probable outcome but believes the current pause in monetary policy adjustments is appropriate given the prevailing uncertainties. Although, certain investment banks such as JP Morgan actually believe the Federal Reserve will be forced into cutting rates. This is due to expectations that the economy will struggle under the new trade policy. For example, JP Morgan expects the Federal Reserve to delay rate cuts but will quickly cut towards the end of 2025. Market Risk Appetite Takes a Hit! A big factor for the day is the drop in the risk appetite of investors. This can be seen from the VIX which is up almost 6%, Gold which is trading 1.30% higher and the Japanese Yen which is the day’s best performing currency. Most safe haven assets, bar the US Dollar, increase in value. It is also worth noting that all indices are decreasing in value during this morning's Asian session with the Nikkei225 and NASDAQ witnessing the strongest decline. Previously the stock market rose in value as investors heard rumours that tariffs would only be on certain countries. This bullish swing occurred between March 14th and 25th. Over the weekend, President Donald Trump indicated that the upcoming tariffs would apply to all countries, not just those with the largest trade imbalances with the US. NASDAQ - Technical Analysis In terms of technical analysis, the NASDAQ continues to obtain indications that sellers control the price action. The price opens on a bearish price gap measuring 0.30% and trades below all Moving Averages on all timeframes. The NASDAQ also trades below the VWAP and almost 100% of the most influential components (stocks) are declining in value.     The next significant support level is at $18,313, and the resistance level stands at $20,367.95. Key Takeaway Points: NASDAQ falls to its lowest since September 2024 as the US confirms tariffs on all countries, adding to inflation concerns. Core PCE inflation rises to 0.4% MoM and 2.8% YoY, increasing the likelihood of prolonged high interest rates. Investor risk appetite drops as VIX jumps 6%, gold gains 1.3%, and safe-haven assets outperform. NASDAQ shows strong bearish momentum, trading below key technical levels with support at $18,313 and resistance at $20,367.95. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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