XLU Weekly: Balance Development Early Week Before Price Discovery Higher Toward Key Resistance

Summary

• Balance development in Monday’s auction before a sell-side breakdown attempt to 63.55s in Tuesday’s trade.
• Buy excess developed there, halting the sell-side sequence before price discovery higher developed to 64.63s ahead of the week’s end.
• Bullish breadth stalls following initial decline from all-time highs.
• This week’s auction saw balance development and a failed sell-side breakdown attempt before price discovery higher developed to 64.63s, testing key resistance, into week’s end.

In this article, we examine the significant weekly order flow and market structure developments driving NYSEARCA:XLU price action.

As noted in last week’s XLU Weekly, the highest probability path for this week was for price discovery lower, barring failure of 64.75s as resistance. This week’s primary expectation did not play out as a sell-side breakdown attempt early week to 63.55s failed. Buy excess formed there, halting the sell-side sequence, driving price higher to 64.63s ahead of Friday’s close, settling at 64.40s.

06-10 January 2020:

This week’s auction saw balance development, 63.76s-64.17s, in Monday’s auction around last week’s settlement before buying interest emerged, 64s, into Monday’s close. Monday’s late buyers failed to hold the auction as a sell-side breakdown attempt developed in Tuesday’s trade, achieving the weekly stopping point low, 63.55s. Buy excess formed there as buying interest emerged, halting the sell-side sequence, driving price higher to 63.91s where buying interest emerged into Tuesday’s close.

Tuesday’s late buyers held the auction as minor price discovery higher continued in Wednesday’s trade, achieving a stopping point, 64.16s. Selling interest emerged late in Wednesday’s auction as price discovery lower developed to 63.86s where buying interest emerged into Wednesday’s close. Wednesday’s late buyers held the auction into Thursday’s trade, despite a minor probe lower, before price discovery higher continued, achieving a stopping point, 64.30s, before buying interest emerged, 64.17s-64.24s, into Thursday’s close. Thursday’s late buyers held the auction as price discovery higher continued in Friday’s trade, achieving the weekly stopping point high, 64.63s. Selling interest emerged there amidst a sell excess, halting the buy-side sequence, developing balance ahead of Friday’s close, settling at 64.40s.

This week’s auction did not see the primary expectation play out as a failed breakdown resulted in price discovery higher to test key supply overhead, 64.75s-65s. Within the larger context, this week’s auction saw

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