Low Volume, Tight Range day

Today was probably the most boring and hardest to trade for retail traders in relation to the last week, as we had a small range day. The volume was also very low. After the open of the NYSE, price consolidated within a 10 point range, around the 100K supply zone.  You would have had to be very nimble to get any thing out of this day.

Now, I do not know if this was distribution or absorption by the Bulls. However, I will be consistent, and say we witnessed low volume distribution and that we should be looking to sell at good supply levels after the NYSE open tomorrow. Targeting the demand level on the 100K vol chart, between 1630 - 1626.  The next zone down is the throwback around 1615.

However, if we break above the supply level, then the upside target is around the 1660 level.

Last night I showed the 3 Renko chart with a demand zone at the close of Friday. I did this because a Juvenile commented on BMT, and said it was not possible to make a profit using non time based charts- i.e, Tick, Volume, Range and Renko. I thought this was a stupid statement. Although he cannot use these non time based charts, others are able to profit from them because they know how to trade price action, without the necessity for time.

I use all types of charts as I get different information from each, and look for confluence between them.  The time based charts are my main ones, as they allow me to see volume, based on time, as per my VSA methodology. But the others are very useful. As you have seen, the 100K vol chart is my main one for seeing the better S&D zones. With the smaller 20K vol and 8K tick giving better intra-day granularity, and the 2K tick being the entry chart. I also use a 8 tick Range chart for my Volume ladder, which is very important for seeing Delta divergence with price.

Anyway, I was going to say that the demand zone on the Renko chart was very good, as price fell to it from the open on Sunday. It then rallied 14 points into the open of the NYSE, from where it fell 10 points. So the moral of this tale is, that if you understand supply and demand trading, then the chart type is not important as your experience.

Here are todays charts, including the Renko.

NFP Rally

On Friday we had the NFP report an hour before the market opened and price went up on a very bullish move, before retracing just after the NYSE open and reversing at a demand level right into the supply zone I mentioned on Thursday.

Looking at the larger 60 min chart, the rally from 1596 to 1644, appears to be a two stage retrace, and I am expecting price to return back below 1600 this week and could actually go below the demand level at 1590 - 1595.

The rally that began on Thursday, was not a selling climax on the 1 hour chart (although when it occurred, the 5 min chart showed it as relatively climactic based on intraday volume) and that is the reason I believe that the down move will continue.

Here are the charts from Friday. Nb, I increased the size of the tick charts to reflect the expected increase in volume and volatility for NFP day.  I have also attached a 3 Renko chart to show how good it is at identifying good S&D zones.

Climactic sell off seen before large rally on ES

Today was another very interesting day for the ES. Price rallied up during the overnight and London session. We then had the Unemployment claims report out at 08:30 EST and price fell very quickly into the open of the NYSE. Where it rallied a good distance very quickly before a 16 points sell off, culminating with a climactic selling, seen on the 20K volume chart.

We also had the largest 5 min volume of the day at the same time with a CCH bar closing near it's high. This was a very good reversal signal. After this, price rallied around 25 points in the last 3 hours before the NYSE close.

Yesterday, I said that I was expecting a rally up to the supply zone on the 100K vol chart and that is what occurred, but it did not go in the way I expected it to.  I did not expect price to break 1600, but it did and came very close (within 2 points) of the demand zone I identified a while back.

On the 20K vol and 5K tick chart the sell off looked very climactic and would have scared weak holders out of their long positions, with the Smart Money waiting to snap their hands off.

Tomorrow is the Non-Farm Payroll report and we can expect anything to happen. We could get a rally up to the 1640 supply zone on the 100K vol chart, or we can reverse back down to the 1590 - 1595 level.

I think that we will get a rally up to the 1640 supply zone before we resume the sell off.  However, I still think we will return to the 1590 level before we finally start the next leg of the up move.

Here are some charts:

1620 Demand zone broken with force

Today, the demand zone that I have had on my 100K vol chart for a month was broken with some force. Next stop is the demand zone at 1590 - 1595, however, it may not get there tomorrow. The reason for this is that I saw large volume at the close on the last two bars on the 1 minute chart.

So this may signal a bit of a fight back, but probably just back up to the 1620 level which is now a throwback zone.  We will probably hit 1600 before the retrace back to 1620.

Once we had broken the demand zone, we had several very good selling opportunities at supply or throwback zones. There were a couple of largish retraces of about 8 points each. But on a day like today, it was best sticking to short trades only.

If I am right, and we do get to the next demand level, then it represents a very good buying opportunity, as price will have dropped nearly 100 points and shaken out the market. 

As the USA employment data is coming out over the next 2 days, culminating with the NFP on Friday, we could just get the push down where the Smart Money will be waiting to buy from weak holders.  The next 2 days will be very interesting indeed.

Here are some charts:

Supply and Demand zones held

Today was a very good day for trading from the Supply and Demand zones on the 100K volume chart.  On the open of the NYSE, price rallied around 8 points to the top of the supply zone. Before extensive basing and a fake out above the zone. Price then fell and once we had broken the low of the basing zone, it was down all the way into the demand zone. This was around a 25 point fall from high to low today.

Once we had reached the demand zone and formed a low, price rallied around 14 points into a supply zone formed today in the large down move.

I missed the down move today, but got in very near the low with a great buy signal on the 1500 tick chart, with a HVC bar being engulfed. Due to my bearish outlook, I only held for 4 points, and then watched it rally another 10 points.

I am very impressed with how the 100K volume chart gives such good supply and demand zones, and if I was able to hold on to trades longer than I currently do, then I could trade zone to zone on days like this and recent days.  The 20K volume chart is also very good for seeing intra-day S&D zones. The 1500 tick chart is my entry chart and gives good entry signals.

I am still bearish on ES and if we get basing tomorrow between the S&D zones (1621 - 1636) then I expect a breakout to the down side on Thursday.

Here are some charts:

ES update

Price fell from Friday's close and into the demand zone I pointed out on the 100K volume chart, where it reversed around 18 points.  I have had that zone on the chart for a very long time. 

Although we got the reverse, we did not get the large volume I was expecting to accompany it, so I do not think this is the start of the next leg of the up move.  I am expecting more down move with the next target being the zone at 1590 - 1595.

There were some good entries to engage the up move. Note that it stopped at a supply level (from the 15 min chart) at the close.

There were also some very good entries for engaging the down move into the demand zone, and I have pointed out some of these opportunities on the attached charts.

The volume on the two closing bars on the 1 min chart were slightly larger than usual, but not excessively so.

Here are some charts:

 

 

 

Extremely large volume at close on Friday

I once again saw very large volume on the last 2 bars of the close on the 1 minute chart. This was the largest volume I have ever seen on this chart at this time. So we should expect a reaction. Once again, I really do not know which way price will go. However, during this large up move since last year, each time we have had a shakeout and then large volume at the close, like now, usually leads to the next leg of the up move.

If this is the case, then expect a further fall on Monday, ending with very large volume during the morning session of the NYSE before starting the large up move over the following days and a break above the 1700 level in the coming weeks.

However, as I said a couple weeks ago, I believe we have seen a Buying Climax and my expectation is for further down moves.  And if we do break below the demand zone around the 1620 level, then next stop is the demand zone at 1590 - 1595.

For those not familiar with Wyckoff or VSA, a 'Buying Climax' is the end of the up move and we should get a very large shakeout/reverse.

Here are some charts from Friday.