Gap Fills and Pullbacks

CME Futures GAP Fills

Once a week we cover the CME Futures Gap Chart just to see where we’re at.  The logic behind gaps is that there are orders still waiting to get hit from areas that have gone untested.  This is true in a sense but we’re also not talking about some small orders.  Instead, we are talking about large institutional type orders.

Be that as it may, regardless of how you feel about Gaps, they tend to almost always get filled.  Last I checked was a percentage point over 90%.  And with anything that performs at a 90% probability – we must pay attention.

Prior to the ATH getting replaced, we had a Gap from near $60K to around $62K that was not filled.  As you can see from the second picture above, on October 15th, that Gap was completely filled.

But there is a NEW GAP in town and we have not filled it yet.  Not only that, there was an excellent opportunity to fill it yesterday during the pullback but it didn’t get filled then either.

We have no existing overhead Gaps and the closest downside Gap besides this one is at $32,270.  We always want to be mindful of the Gaps, where they are, how far away from the current price action they are, and whether they will get filled or not.  When you see the price drop $4K but then you see a Gap in the waiting, don’t worry too much.

Pullbacks Are Not Always Equal

I guess we should define a pullback before we begin.  A Pullback is when the price of an asset falls down to a recent level of support after making an advance upward.  Assets do not go straight up and straight down, except in the case of DWAC yesterday – but that’s another story altogether.  Markets and the assets in those markets tend to rise and fall all the time.  These minor falls, in the context of an upward trending market, are where buyers look to get in on “the dips”.

Some pullbacks can be small while others can be very large.  The small ones tend to get used a lot before a bigger level of support is called into action.  In the example above, we can see the Orange and the White moving averages get used a lot as support before the big dog Red gets put to work.  

We cover Moving Averages in great detail in the L3 – Intermediate School.  In fact, it’s nearly 5 hours’ worth of education, so we’ll need to summarize a bit at the moment.

Yesterday we saw a strong move downward but in reality, we didn’t even hit our first level of dynamic Support – the 9 EMA on the Daily Resolution.  The 9 EMA is the lower of the two Orange Lines below.  But, because we are in such a Strong Upward Trending Market, we break out our 7 EMA.  As you can see, the upper Orange Line was tested and we have found some temporary Support for the moment.

Any ALTS Worth Watching?

Solana is a highly functional open source project that banks on blockchain technology’s permissionless nature to provide decentralized finance (DeFi) solutions. While the idea and initial work on the project began in 2017, Solana was officially launched in March 2020 by the Solana Foundation with headquarters in Geneva, Switzerland.

The Solana protocol is designed to facilitate decentralized app (DApp) creation. It aims to improve scalability by introducing a proof-of-history (PoH) consensus combined with the underlying proof-of-stake (PoS) consensus of the blockchain.

Because of the innovative hybrid consensus model, Solana enjoys interest from small-time traders and institutional traders alike. A significant focus for the Solana Foundation is to make decentralized finance accessible on a larger scale.

We have spoken about SOL before and we still very much like it.  In the last three days, SOL has crawled out from its consolidation and is now only a few dollars away from matching its ATH at $216.  After $216, we enter Price Discovery, something we talked about yesterday.  We see some potential profit-taking at $243 and $277.  One of our longer-term targets is all the way up at $539…

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