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 key resistance failed and aggressive price discovery higher ensued through major resistance to 66.85s ahead of Friday’s close, settling at 66.76s.
13-17 January 2020:
This week’s auction saw price discovery higher to 64.98s in Monday’s auction as last week’s late buyers failed to hold the auction. Buyers trapped, 64.97s-64.76s, at/near all-time highs into Monday’s close. Minor price discovery lower developed to 64.50s early in Tuesday’s trade as Monday’s late buyers failed to hold the auction. Buy excess developed as sellers trapped, driving price higher to 64.97s where buying interest emerged into Tuesday’s close.
Tuesday’s late buyers held the auction as a gap higher open developed to new all-time highs in Wednesday’s auction. Price discovery higher developed to 66s as buying interest emerged ahead of Wednesday’s close. Wednesday’s late buyers held the auction as buy-side continuation developed to 66.37s in Thursday’s trade as buying interest emerged, 66.36s-66.22s, once again into Thursday’s close. Thursday’s late buyers held the auction as buy-side continued in Friday’s trade, achieving the weekly stopping point high, 66.85s, ahead of Friday’s close, settling at 66.76s.
This week’s auction did not see the primary expectation play out as major resistance failed and price discovery higher resumed after the consolidation of the Fall 2019 to new all-time highs. Within the larger context, this week’s auction reflects a structural buy-side breakout above prior major resistance, 65.11s.
Looking ahead, the focus into next week centers upon response to the key demand cluster, 66.30s-65.70s. Sell-side failure at this key cluster would target new all-time
