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.

ES Update

Well, ES came down to the demand zone near the 1630 level, I had on the daily chart (on my last update) and bounced up nearly 25 points before coming back down and testing the recent low then bouncing back up on Friday from a demand zone created on the previous down move (see 100K vol chart).

If what we have seen on Wednesday is really a buying climax, then price has to break through the demand zone with force.  If it does, then the next demand level is around 1590 and then eventually 1480, but this is assuming that we have witnessed a buying climax.

If it was not one, then we should start going back up. However, we know that the Smart Money usually use the Bank Holidays to move price and we may see it this week.

Here are some charts from Friday.

Talking ES Update

Yesterday, I said I saw low level distribution coming into the ES market and today, we saw the result. Early into the session, price moved up fairly quickly, but selling was seen with several high volume churn (HVC) bars in the up move. This was on the 1 min chart. 

On the 100K volume chart, we had what appears to be a Buying Climax followed by a selling frenzy into the close. Price did bounce back about 12 points after hitting a demand zone (see yesterday's 30 min chart).

Yesterday, I said we would have a short term shakeout, but this may herald a longer term shakeout and my target of 1630 could quite easily be blown away.

Volume on the last two, 1 minute closing bars is as expected, higher than usual. After the large fall today, we may see consolidation tomorrow.  However, thing do not always go as expected. I still do not know if we will have a larger shake or if today was just a one off pre-empting the FOMC.  As always, we will see tomorrow.

I started trading a little late today and opened my platform on Gold and saw an opportunity to take a short (in a rising market), so only went for a small 48 tick winner, but price did fall another 80 ticks from my exit. However, I was quite happy with it as I did not really plan it out.

I then switched over to CL and awaited the Oil Inventory weekly report. I knew we were in a down day, so I took a short on a retrace just after the OIA report, and got a very good entry, however, my trade management skills leave a lot to be desired and I only took a 19 tick profit and watched as price fell all day. Blast. I did plan to have 2 contracts on the trade, but my 2nd limit order was not hit.

Later, I looked at the ES, and saw the down move unfolding and took a short after price had rallied up back to a great looking Throwback zone. I took 1 entry at market and placed 2 limit orders. Unfortunately, my limit orders were not triggered, so I only had one contract on the trade and profit was taken for 7.5 points. Such a pity as price fell another 25 points after that.  However, as I did not properly plan it out, I was quite happy with it.

So 3 trades today, all winners, but I feel somewhat deflated as I did not allow my CL trade to run further, as that one was planned out unlike the ES and GC which were fortunate opportunities.

Here are some screenshots: