Friday's ES Price Action

I posted before the open of the NYSE when I change to the September contract and you can see the zones I was watching. Prior to the open, I had seen price being held in a tight consolidation basing zone by limit orders, identified the Delta Divergence indicator.

I wanted to see which direction price broke from it, and to take trades in the direction of the break.  Price broke impulsively to the upside so I was looking for longs.  And the delta divergence indicator gave a buy signal on the 6 tick range chart (but not on 4 tick range) when price reversed to the zone. However, this proved to be a loser, if the signal was taken.

Price broke through the zone and continued the down move.  So my outlook changed to be on the short side.

I did take a long trade and scalped for 2 points, but then took a short with 2 contracts at a good supply level seen on the 4 tick range chart.  I scaled out on the first contract for 4.25 points and then closed the second contract for 7 points.  I did take a 1 point scalp short later on.

You can see these trades on the 4 tick range chart.  So some good trades taken using the Delta Divergence indicator. 

On Thursday, I said that price was at a supply zone, and I did not expect it to stop the up move as it was not 'fresh'.  I was wrong on that count.  I should know by now that a S&D zone, still remains until it is broken with force.

Price went down most of the day, but it looks like a corrective down move to me.  I have a demand zone around 1605 - 1610 and will see if we get buy signals there on Monday.  However, I will look to engage the down move while it is still in place.

September Contract

I have started early today in order to roll over the ES contract from June to September.  This has meant changing the location of the S&D zones.  They have all gone down around 6 points.

If we look on the 8K tick chart, we can see what looks like a selling climax before the impulsive rally, after we had seen accumulation on Wednesday evening.  This climactic action was not apparent on the June contract.  This look very much like a Head and Shoulders pattern, with accumulation on the left shoulder and the selling climax as the head.  Now we look for price to retrace back down to form the right shoulder.

So we may actually get a down move today, rather than the up move to the next supply zone that I was expecting.  However, the market will tell us which direction it is going to take in the due course of todays trading.  So we should not go in with a bias, but trade with the prevailing intra-day direction. Looking to engage when price retraces.

Here are charts with the September contracts:

 

 

40 Points up day after Accumulation seen yesterday

On yesterday's posting, I stated the it looked like we were seeing the start of accumulation. And boy, did we see the result today, with a massive 40 point rally into the close.  Price stopped at yesterday's supply zone, but it is not fresh, so we will need to look further up for the next supply zone. Around the 1660 handle.  So look to target that number tomorrow, buying the dips.

Today's action was a killer for any mean reversionist, but a profitable one for those that saw the trend early.  And if they had seen the accumulation late on yesterday, then they would have been rubbing their hands in anticipation.

Price moved down during the overnight, to a couple of points above the 1690/95 zone I mentioned yesterday, and then based before the large up move. This always seem to happen when we see accumulation the previous evening.  So it is something we should remember.

The closing volume seem normal, but trading has been on both the June and September contracts, so I really do not know if the volume is unusual.

So, I am expecting price to run up to the 1660 level tomorrow and may go higher over the next few days.

Here are some screenshots.  To add to my recent comments about using different type of charts to get more information, I have attached the 6 tick Range (no gap) bar type with the delta divergence indicator.

NFP demand zone broken today

I finally got it right about the NFP demand zone being broken today.  Price reversed at a supply zone from yesterday's 20K vol chart on the open of the NYSE.  We also had a RPM 2 bar reversal on it giving a great sell signal.

Price continued down all day until we reached the DZ at 1615 and rallied 7 points from there, before resuming the down move.  With a low around the 1610 level.  So at this time, I am expecting that the next demand level of 1690/95 should be reached in the next 2 days.  After that I do not know if we are in for a large rally or if this down trend will continue.

Towards the close of the day, it looked like buyers were stepping in with limit orders and the 15 minute chart looked as if we were seeing the start of accumulation. Also volume on the closing 2 bars on the 1 minute chart were higher than normal, and were the largest volume of the day.  So once again, this could be the start of a rally.

I really do not know which way price will go tomorrow.  We may get another low volume small range consolidation day, and as we are coming into contract roll over, anything can happen.  It could be options expiry this week, so we may get some volatility on Friday.

Here are some charts

The NFP demand zone held today

Yesterday, I said that I had seen distribution and would expect price to fall, with a target to the 1625 - 1630 demand zone.  I also noted that the demand zone from the NFP report on Friday was not a reliable one.

Well I was right on the first count, but wrong on the second.  Price did fall to the demand zone I stated it would.  However, it fell further and reversed at the demand zone that I said would not stop the down move.  It rallied nearly 20 points from there.

I did also say to look for shorts at good supply zones, and we did get a great zone formed on the 5 min chart during the Globex session.  Price fell from there towards the day's low.

So tomorrow, my expectation is for more down move, and hopefully, I will be right this time, in saying that the NFP demand zone will be broken.

Here are some charts:

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.