In this article, we examine the significant weekly order flow and market structure developments driving NYSEARCA:XLK price action.
As noted in last week’s XLK Weekly, the highest probability path for this week was for price discovery higher, barring buy-side failure at key support, 89.96s. This primary expectation did play out as minor price discovery higher developed to 91.44s ahead of Wednesday’s holiday. Buy-side continuation developed through Thursday’s trade to 92.29s, new, all-time highs ahead of Friday’s close, settling at 91.91s.
23-27 December 2019:
This week’s auction saw price discovery higher in Monday’s auction as last week’s late buyers held the auction, achieving a stopping point, 91.44s. Minor sell excess developed there as balance ensued, 91.44s-91.03s, as the breakout area held as support ahead of Wednesday’s holiday.
A gap higher open developed in Thursday’s trade as price discovery higher continued to 91.94s into Thursday’s close. Price discovery higher continued early in Friday’s trade, achieving the weekly stopping point high, 92.29s. Minor price discovery lower developed to 91.68s ahead of Friday’s close, settling at 91.91s.
This week’s auction saw a buy-side breakout early week as last week’s resistance failed and price discovery higher continued to 92.29s, new all-time highs. Within the larger context, price discovery higher continues within the bullish bias following the breakout of October 2019.
Looking ahead, the focus into next week’s auction will center upon response to this week’s resistance, 92s-92.29s. Sell-side failure to drive price lower from this key supply would target new all-time highs. Alternatively, buy-side failure at this key supply would target key demand clusters below, 90.40s-90s/88.40s-88s, respectively. From a structural perspective, the highest probability path near-term remains buy-side barring buy-side failure at key support, 91.06s. Within this near-term context, the intermediate term (3-6 month) bias is bullish barring buy-side failure at 85.16s. Next week’s auction may see reduced trade and range amplitude due to the New Year’s holiday.
