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.

More Unusual volume activity on ES

The last time I updated this blog was a month ago and reported unusual volume activity after we had a sharp fall towards the end of the day. Price fell into the next day and then has been on another long up move of around 65 points in the month. In effect what we had seen was a shakeout and then large buying coming in at the close and a little more down move to take out some more stops before again pushing up.

I have again seen large unusual large volume on the last two 1 minute closing bars. Again, I do not know what this signifies, however, I am going to stick my neck out and say this is initial selling before a larger shakeout of the market in order to push it down to a level where the Smart Money (SM) feel it would be a good place to buy. Maybe around the 1450 level.

The reason for this opinion is that on the last occasion, price had just been through a shakeout with a couple of large sell off days, before the unusual volume activity and that was the last shakeout before the re-commencement of the up move.  However, on this occasion, we have been in a grind up with the occasional pullback and as Thursday was another up day, the SM used it to offload some of their inventory into the buying.

The second reason, is a fundamental one (I don't usually use fundamentals) where we have North Korea posturing aggressively. I believe the SM will use this as an excuse to have a large shakeout before the next leg of this very improbable up move.

So we may see a gap up on Sunday night and maybe some more up move on Monday, before the shakeout I am expecting.

One thing I know is, that the SM use holidays to make their move, and I think that is what they will do again this Easter bank holiday.

Again, this is pure speculation on my part and not advice to dump all your stocks.

Here are some charts.

On another note, I actually communicated with an individual that actually reads this blog. One of the lucky few.  LOL.  Anyway, David, I hope you found this interesting.

Regards,

Dudley

 

Unusual volume activity on the ES

Today we had very large volume on the last two one minute price bars near the close (16:00 EST - 21:00 GMT) on NYSE. The volume was around 3 times larger than usual over the 2 minutes. This same thing occurred back on 31st July and I had also wrote about it on this blog. I do not know what this means in relation to buying or selling, except that we are going to have some large moves over the next days and weeks.

The last time this occurred, we had the NFP the next day and price fell for 2 days before a large rally took place, so maybe that will occur again.  However, with the recent weakness I have seen in the market, maybe, we will get two up days and then a large sell off. We may break the recent high and take out all buy stops and encourage Bulls into buying the breakout, before slamming down.  However this is pure speculation as I am not an oracle and I do not know what will happen.

On another note, I got a very good long at a demand level I saw formed after the NYSE open and I took 5 points to a supply zone. Pity as price went another 5 points, where upon it fell like a brick after that.  The demand zone was seen on all time based charts and also the 20K volume chart, so it was a very high probability zone.  I went to the 1 min chart to get a better entry point where I would have a smaller stop loss of 5 ticks.  So quite a good trade.

Pity I had stopped trading when the large sell off took place as the set up was something I look for in a reverse. Here are some screenshots from today.

 

Update on Daily analysis

Well what a day it was today. The Euro and the ES both tanked and the Yen rose like a flying salmon. 

On my last weekly analysis, I said that I had concerns about ES as I had seen real weakness coming into the market and today this weakness showed it self.  We had an early rally in the Globex session right to the top of the throwback level on the last chart and promptly fell over 40 pts. 

I did actually short near the top of this move, but only managed to take 5 points profit from it. The reason for shorting, was that I saw distribution taking place and then an upthrust taking out stops.  So I had another badly managed trade. The low from Thursday has been taken out, and we should look for more down moves.

The Yen gapped down on last night's open and tested the low of the high volume bar before spectacularly breaking out of the basing zone with a climax breakout bar and closing above Thursday's high, which I highlighted on  my last analysis.  So this is the signal for the large up move I was expecting.

The Euro gapped up on the open and then rallied up to the throwback zone on my last analysis before basing and then took out stops, before falling like a brick.

As I said yesterday, we should have been looking for a good supply zone on the Eur/Jpy forex cross pair to short.  If we timed it with the price action on the Euro futures, then we could have had a potential 400 pip short trade.