NF printed a short covering - P shape profile with a large buying tail on Jan 18, and the expectation was to get a mean reversion move higher into a down-trend which started after excess was marked on Jan 15–16. In the previous two sessions, NF got this mean reversion move higher and probed above the Jan 17 trend down day VWAP and extension handle zone but failed to get acceptance there and went for a bearish outside bar on Jan 20th.
Bearish outside day along with selling tail as well as buying tail. Volumes were quite low, at just 48% of ten-day avg volumes. Such a low volume auction at an important zone - Jan 17 trend down day VWAP and extension handle zone, which was advantageous to sellers — is a poor job from sellers. Thus sellers ability to sustain below 21660 + range extension beyond PDL 21566 is crucial; else buyers could take control of the auction and higher time frame down trend could end.
If sellers manage to get acceptance in buying tail (21610–566) plus move below 21540, means higher odds for test of 21470–440, which is the Jan 18 Point of control & value area low zone. Below 21440 test of buying tail from Jan 18 profile at 21390–350 possible. Extremely weak below 21350 for probe of 21280–250 / 21215, as of now not expecting such move.
If buyers manage to sustain above 21660–690 right away next session, it means they have taken over and could push for test of 21770 / 21835 / 21860. Sustaining above 21840 can get a partial gap filled at 21910 above that test of excess marked on Jan 15–16 for a probe of 21970 / 22020 and extreme case 22090, then decide there.
Swing-wise NF suggests a mean reversion move into a downtrend auction. There is still not much clarity considering the lower volume of sessions on January 20th. After one or two more sessions, can draw a clean swing view.
