NASDAQ Futures Trade Compass – February 12, 2025

Current Market Snapshot

• NASDAQ Futures Price: 21,775
• Change from Yesterday’s Close: -0.05%
• Current Session VWAP: 21,794

🔍 tradeCompass Overview

Unlike typical breakout strategies where we identify bullish and bearish thresholds, today’s tradeCompass focuses on fading moves within a defined range. This means waiting patiently for price to reach the extremes of the range before considering a reversal trade.

📌 Key Trading Plan:

• Fade the move at either range high or range low rather than trading breakouts.
• Bearish Reversal Zone: 21,882 – 21,900 → Look for short signals.
• Bullish Reversal Zone: 21,711 → Look for long signals.
• Partial profit targets are detailed below for both scenarios.

🔻 Short Trade Plan (Bearish Reversal at 21,882 – 21,900)

Once price reaches this upper range, look for signs of rejection or weakness before shorting.

📍 Short Entry Zone: 21,882 – 21,900

• First Partial Profit Target: 21,867 → Just above POC of February 10.
• Second Partial Profit Target: 21,836 → Just above 1st Upper Standard Deviation of VWAP (Feb 7), near VAH of Feb 11.
• Third Partial Profit Target: 21,795 → Near session VWAP, between VWAP of Feb 10 & Feb 11.
• Final Short Profit Target: 21,725 → Above VWAP of Feb 7 & POC of Feb 5.

For swing traders, an extended bearish target is:

• 21,618 → Just above VWAP of Feb 5.

🔺 Long Trade Plan (Bullish Reversal at 21,711)

Once price reaches this lower range, look for signs of support before going long.

📍 Long Entry Zone: 21,711

• First Partial Profit Target: 21,747 → Just below VAL of Feb 6.
• Second Partial Profit Target: 21,780 → Just below VAL of Feb 10.
• Third Partial Profit Target: 21,817 → Below VAH of Feb 6.

For swing traders, extended bullish targets include:

• 21,940 → Near VAHs of Jan 31.
• 22,078 → Aligned with VAHs of Jan 24 & Jan 22.

📌The Critical Benefit of tradeCompass: Liquidity & Market Participation

One of the most valuable insights provided by the Trade Compass is that we have identified key liquidity levels—areas where market participants are expected to engage.

These price levels are where traders often:

1. Cover part of their position (profit-taking zones).
2. Initiate new speculative positions (potential reversal or breakout points).

Even if you choose not to fade the move at the extreme range levels, you can still extract significant value by leveraging the identified profit targets. For example:

• If you’re already long, you can use the bullish profit targets as reference points to decide whether to take partial profits.
• If you’re trading breakouts instead of reversals, these levels still provide critical orientation on where price reactions are likely.

👉 Bottom line: The price levels we provide aren’t just theoretical—they represent key liquidity areas where significant market activity is expected. Use them as an orientation tool to refine your own strategy and risk management approach.

🎯 Market Outlook Summary for Nasdaq today

• Expecting range-bound trading rather than sustained breakouts.
• Trading approach: Fading moves at the extreme levels rather than chasing momentum.
• Short at the high range (21,882 – 21,900) and long at the low range (21,711), based on reversal confirmation.
• Defined partial profit targets help traders manage risk and secure profits in this tight range environment.

📚 Understanding Key Market Levels for Nasdaq Futures Today

1️⃣ Value Area High (VAH) & Value Area Low (VAL)

• VAH is the upper boundary where 70% of the trading activity took place in the previous session. If price rejects VAH, it signals potential resistance.
• VAL is the lower boundary where 70% of trades occurred. A bounce from VAL suggests strong support.

2️⃣ VWAP & Its Standard Deviations

• VWAP (Volume Weighted Average Price) is a benchmark used by institutions to gauge fair value.
• Standard deviations of VWAP (e.g., 1st and 2nd deviations) help traders identify overbought or oversold conditions.

3️⃣ Point of Control (POC)

• The POC is the price level where the most volume was traded on a given day. This often acts as a magnet for price action.

📌 Final Note:
This analysis is for orientation purposes only and should be combined with your own trading strategy, time frame, and risk management approach. Trade at your own risk.

Stay patient and trade wisely. Visit ForexLive.com for additional perspectives.

-------------------------------------

🚨 Trade Compass Follow-Up: CPI Report Impact

The CPI report triggered a high-volatility reaction in NASDAQ futures, reinforcing why most day traders avoid trading during major economic releases. However, for those who did trade, the lower range of 21,711—highlighted in the Trade Compass as a potential reversal zone—was indeed tested.

Key Takeaways from Today’s Market Reaction:

1. Trade Compass is an orientation tool, not a strict signal generator.

   • Every trader must verify entries using their own tactics, timeframes, and indicators.
   • Just because a level is mapped doesn't mean an automatic reversal—confirmation is key.

2. No sustained reversal signals formed at 21,711.

   • Due to the CPI-induced momentum, NASDAQ broke below this level decisively, invalidating a clean reversal at that stage.

3. Current Price Action: Potential Retracement Opportunity

   • Now that the market has cooled down, NASDAQ futures are at 21,560.
   • Traders can still utilize the Trade Compass levels to monitor a potential retracement up to 21,711.
   • If price reaches that level, look for a sustained rejection signal before considering a short entry.

🔍 How to Approach the Next Move:

• Use the Trade Compass price levels to identify retracement exhaustion points.
• If 21,711 is retested, verify with your own indicators before taking a position.
• A confirmed rejection at 21,711 could provide an opportunity to resume the downtrend post-CPI.

📌 Bottom line: The Trade Compass is a tool for orientation, and today’s price action is a clear example of why traders must always confirm setups before entering trades. 🚀