Will The ES reach 1600 on the next session?

The inexplicable grind up continues confounding the intellectuals.  If we reach 1600 tomorrow, I expect a parade on Wall St to commemorate this amazing event in the face of extreme adversity.  This market is staying irrational longer than many people are able to stay solvent.

Anyway, there were no reason to short the market until later in the day when we saw another squat bar on the 30 min chart, which only sent the market sideways for the following 4 hours into the close.

Not really much to write about today.  I did not take any trades as I did not feel like trading.  I just watched price unfold on CL, ES and GC and also 6E.

Here are some ES screenshots

Update on ES

Well, the day did not go as I had forecasted yesterday.  I was expecting a down day, but this thing keeps going up on petrol fumes.  You know what they say - 'trade what you see, not what you feel'.  I need to adhere to that cliché.

The FOMC minutes came out earlier than expected.  It came out before the open of the NYSE, so we did not get the basing for several hours we normally do.  Once we had the open, price broke up on high volume and above the supply zone I have had on my charts for the last week.  Once we had seen this, and we knew that as the FOMC was already known, then price would continue up and to look for buying opportunities on the smaller charts.  I use the 4 range, 1500 tick and 10K volume charts for my ES intraday entries and all of these gave good entries after the break above the supply zone.  See attached charts.

I was trying to trade Gold and as I had started late, I missed the better supply zone trades in a down day.  I had a couple of opportunities later on, but as price had fallen so far, I did not think it would fall any more and I was looking for a reverse which never materialised.  'Trade what you see, not what you feel'.  So no trades today.  Pity I did not hold on to that trade I made late yesterday, as I would have got the top of a near $40 down move.

I like to trade CL on a Wednesday because of the Oil inventories report, but I was getting conflicting messages from it, and it looked too choppy, so I passed on it.  Pity, as there was a very good long set up later and price moved up around 70 ticks after that.

Here are the ES charts from today showing the long opportunities after the climax break above the supply zone from last week, and the one created today on the FOMC minutes at 09:00 ET (14:00 BST).

Today's trade

I took a counter trend short on GC today after missing out on a good long set up because I had distracted myself by looking at CL at the time the buy signal arrived.  And as there was no trend re-engagement opportunities, I had to wait for a counter trend set up.  This arrived, when I saw a HVC bar on much larger volume than the previous bar on the 2 min chart. I placed 2 limit orders and used a very tight stop loss of 4 ticks in case I was wrong as I know this thing can move against you if you are.

It worked very well and I only took 2 ticks of heat.  I exited for a 30 tick profit at a demand zone from the 400 volume chart.  So this trade worked out very well.  However, price has continued going down, but I am quite happy at seeing this trade live.

The ES again continue to confound me.  It behaved the same as yesterday, with a good CCH break at the open of the session which could have got a six point profit, then we had a HVC inside squat bar on the 1 hour chart.  Price broke to the upside and continued up into the supply zone that has been on my charts since last Tuesday.

Price continued up and broke through the top of the supply zone and then reversed, closing below it. This looks like a Market Maker manoeuvre to take out stops and then push down.  But I may be wrong and this improbable up move will continue.

Tomorrow is the FOMC so, I expect some basing before it and then and a breakout after.  But in which direction?  We will see.

Today's trade

I have not updated my blog with any of my recent trades, so I will be posting on a couple of days
each week to show my entry technique.  Hopefully this will help with my discipline and patience issues.

I took 2 trades on gold today after seeing a good set up. My first entry was premature and was stopped out to the tick for a 12 tick loss, but I re-entered soon after and took a 30 ticks winner.  However, on my initial trade, I was looking to exit at a demand level, about 90 ticks away, and the second trade would have worked out well if I had not exited early. 

Oh well.  My usual two mistakes - premature entry and exit (I was going to make a crude sexual innuendo, but I decided not to). I made the entry based solely on the 10 min chart. I should have used one of the faster charts for an entry signal and I have attached a 400 volume screenshot showing the optimum entry where I should have entered the first time and would have taken very little heat. I need to practice more patience rather than jumping in too early.

On another note, we had a strange day on ES today.  There was a very good shorting opportunity on the 15 min chart with a CCH breakout and this could have given up to 6 points. Price then consolidated before breaking to the upside. I presume traders had knowledge of the Alcoa result in advance.  However, the up move was on low volume today.  I am not sure what this means, but could be the Market Makers running stops of early sellers from last week. Or I could be totally wrong about the shakeout of the indices markets and price will carry on this improbable grind up to 1600.

There are more results coming out this week, so the market can move in both directions with impulse. we will see.

Follow up from last week's observation

Last week I observed unusually large volume on the last two, 1 minute bars just before the Easter holiday, and predicted a shakeout of the stock indices markets.  On the 15 min screenshot, I noted that I was looking for a selling signal and it duly appeared when we saw a squat climax churn (CCH) bar into new highs (end of a rising market signal) on the 1 hour chart on Tuesday evening.

We also had a squat bar on the daily charts, but it's volume was not very large. However, it was followed by a large volume climax breakout (CBO) bar on Wednesday. price consolidated on Thursday with a large move down on Friday with the NFP report, before a very good rally into the close.

My expectations is for the shakeout to continue and to see more down move over the coming weeks with a possible target of 1450.

On another note, several weeks ago, I predicted that the down move on the Yen could be over, and up to Wednesday it look like that could be correct, but then the Japanese government intervened and carried out their next round of money printing, thus devaluing the Yen again.  However, I did note at the time of my original prediction, that it would be impossible to go against governments devaluing their currency, and so it has turned out.

Here are some charts. Nb, the first screenshot (60 min) was taken when I was doing my EOD analysis on Tuesday night/Wednesday morning, before the large fall on Wednesday during the NYSE session that day.