The Crash of 2020

Case study discovering what led up to, and what was the leading indicators, of this sell off.

This case study will not take into account any fundamentals. Only the technicals used in this methodology.

Yearly

Critical Factors

  • Price rejecting from the plus 2 standard deviation.

  • Failing over and over and over to reach 3400 figure.

Note Thursday with the bearish doji followed by the bearish candle closing into Friday. This suggest that Thursday bears ran, bulls defended. THEN that Friday bears ran and succeed. This was the first sign that a pullback was expected.

Quarterly

A

Imbalance pullback of QDVAH as expected fails at the +1.5. That is a shift in rhythm from the fast trend between the 1.5-2 that developed and a reversal indication.

B

IBP in A fails and returns to QDVAH, however does not find buyers.

C

Into the Friday close we are compressing and holding in QDVA. Opening destination for QDVAL.

Monthly

A

Clean RPB of DVAH suggesting DVAL confluent with PVAH as target.

B

Fails to rebound from VWAP, compresses under VWAP into close.

Weekly

A

We reject off the W-PVAL and are IBD on the Weekly.

Market Profile

Conclusion

Into last weeks close we were looking at a market that tried and failed to accomplish what should have been a easy feat in this bullish environment. One by one the macro landscape started to shift and by Friday, all the macro's pointed to a pullback.

The long was a "crowed trade" at this point and it was evident that once this thing had a bit of gas poured on it the long liquidation move could be quite immediate and accelerate QUICKLY and WITH AGGRESSION.

The key for operating in a landscape like this is to rely on process. Any bull into Friday's close was not paying attention to what appeared to be a obvious "what didn't happen" situation. The degree of the pullback was up for the debate but the potential for one was evident across the board.

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