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.

Update from last week's analysis

I stated last week that I expected accumulation from the Yen, and that is what we got, with price action contained within the large volume bar.  However, for confirmation that this is really accumulation, we now need a break and close above this zone. Note we had a squat bar on Thursday, so we need price to be above that bar. What I would really love, is for price to break to the down side to stop out premature longs and to instigate breakout shorts before slamming back up and stopping them out. And then a close above Thursday's high for a really big up move. Nb, after I had posted my analysis last week, the Japanese Finance Minister (or some other senior government official) said that they will continue devaluing the Yen.  So I may be barking up the wrong tree on this one, as it is difficult to go against government intentions when it comes to weaking their currency.

The Euro has fallen as I expected, and is getting near another demand zone, so expect a bounce up early next week. Hopefully back to the throwback zone (demand now becomes supply), before dropping like a brick. I did also say we should be shorting the Eur/Jpy forex cross pair, and there was a fall of over 300 ticks during the week, before a rally on Friday.  This was more down to weakness on the Euro than strength on the Yen.  So look for a good supply zone to short it.

The ES fell to the demand zone I had pointed out so we could be in for a good rally. However, price action on Wednesday and Thursday, has given me cause for concern.  This is the first real sign of weakness I have seen since this leg of the up move started.  If we get a close below Thursday's low (or the demand zone) we can expect a shakeout (correction) of all the stock indices and possible panic selling. But I am still bullish on the short term but will be flexible with the ES.

Daily charts - Is the Yen down trend coming to an end

I have not posted for a while so I thought I would do a long term analysis based on the daily charts.  Looking at the Yen futures, I noticed a bar with the highest volume since this leg of the down move started, so this may spell the end of the current down move.  We may now get accumulation over the next few weeks and then a large up move. Look for the recent low to be tested with a possible fake break out. 

I have also analysed the Euro and DX charts, and it looks like the Euro is getting ready for a large fall, while the DX looks like we have had accumulation and it is now ready for a move up.  I have also analysed the ES and there are no reasons to think that the up trend will be ending any time soon. Look to buy on the dips at demand levels.

So if you trade FX, look to shorting the EUR/JPN cross pair for a large down move.

Here are the charts.

 

Today's Trades

I took a couple of scalps today for a total of 29 ticks, but I did not trade well overall, as I declined to take 2 trades that would have got 40 ticks each. So I feel I should have done better today and hopefully I will learn from my error and take trades that have set up as per my methodology.

However, saying I did not trade well, both of my scalps were very well executed, and the second one could have gained about 70 ticks if I had held it longer. But as it was taken as a scalp, then taking 17 ticks from it was good.

I made a video on my 2nd scalp trade, but again, the sound was not very good. However, I recorded another video to explain why the trade was taken and also explained the set up for the 2 trades that I declined to take.

Here are the videos and screenshots

http://www.screencast.com/t/3VbX3JpskA
http://www.screencast.com/t/msZQkVhdINQE

Today's Trade

I took a trade on GC today after I saw a HVC breakout on the 10 range chart. I recorded the trade, but did not have my mic properly set up, so there was no sound on the 2 trade videos. So I have done another video to explain the reason for taking the trade and setting the target.

Here are the 3 videos with the trade review video with sound first

http://www.screencast.com/t/Q1oze4My
http://www.screencast.com/t/f1aPkhtLWDd
http://www.screencast.com/t/JabbISxR

Here are some screenshots too