Expanding on the Volatility Contraction Pattern trade into XMAS.
1. Strong Underlying Demand
Elevated Relative Volume compared to prior days’ average
A premarket gap or explosive move off the open
The potential for a breakout on higher time frames
Underlying significant support (20D-50D moving average)
Inability to breakdown
2.Recent Overbought / Supply Pressure
Higher lows
Extreme price contraction on low volume
3.Diminishing Suppy Characteristics
Begin to see the wave tightening
Consolidation into 20D,50D Moving Average
4.Decreasing Volatility
5. Explosive Breakout (TBD)
!!!Not Trading Advice. Just a Bag Holder!!!
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Looking back at the past quad witching. it looks most like June 18th this year.
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DEC 20. 2019. Gap down in morning. early AM rally.
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Loaded up. Now we just have to hold the 50D.
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could still see a flush into the end of the day. Hedging my long position with shorter dated OTM puts.
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following up on the end of day flush idea. You can see in DEC 2018s correction ended shortly after the quad witching that year. It to had a pump from 10am to 11am then flushed the rest of the day into the following week before the bounce.