Wednesday, July 21, 2010

Emini Futures Trading / Market Reverses At 1085-1086 Weekly Trading Zone


“Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us, to him be glory in the church and in Christ Jesus throughout all generations, for ever and ever! Amen.”
Ephesians 3:20-21

Got Doubt?
Bill Johnson, in his book, When Heaven Invades Earth, writes, “Faith is not the absence of doubt. It is the presence of belief.” So maybe today we shouldn’t worry about our doubts. It’s okay to have them. We all do. Perhaps we should just focus on believing what God has said...

Upcoming Webinars
Capture the Move w/ Burton Schlichter
Thursday July 22, 2010 2:30PM CDT
Understand the Big Picture Using the Vix w/ Mike Reed 
Saturday July 24, 2010 11:00AM EDT
Weekly Trading Zones / Daily Results 
When the US market's opened today I heard Aretha belting it out clear as day "R-E-S-P-E-C-T". Although the Globex session managed to tip-toe up to 1087.75, Wall Street drew the line at exactly 1085.50 which was the respect we spoke of in last night's post. Not only was the Weekly Trading Zone 1085/1086 in play, we were also testing the upper boundary of our price channel on the daily chart. 
 Here's a view of the current Price Channel on the Dow Emini Futures

 Here's the ES Price Channel on a Daily Chart (a.k.a. Burt's Big Point)

Today's 30 Min Intra-day Chart
Candle #1 is the 30 minutes prior to the US open and is an inside candle or what is often referred to as an engulfing pattern. This is a rather poor example of an engulfing pattern but it does meet the minimum criteria and does result in substantial follow through. Specifically, the inside candle represents a period of contracted volatility. If, in an uptrend, volatility begins to slow and the market fails to make a new high (as illustrated by the inside candle), then we can deduce that strength is waning and that the chance for a reversal exists. This is merely a heads up alert as to what may or may not happen next. It's now time to sit up straight in your chair.

Candle #2 Is the first 30 minutes of Wall Street and the RESPECT we already covered. Once the low of the candle prior to #1 was broken, an aggressive trader could have entered the market with a stop just over the Globex high.

Candle #6 is another poor example of the inside candle and in this context we would be on the alert for a move up. Here's the problem with 'ol #6, if we break the high of #5 and use that as our trigger to get long, we only have a few ticks before we run head on into our EMA which will potentially serve as resistance in this context.

Candles #7 - 10 establish a range of 3.75 points over the next 2 hours. As we closed out the show we discussed that until the range was broken you would be better served to fix a sandwich or walk the dog.

Q.What do you call 3 spinning tops and a doji in a yellow box?
A.Today's setup.

Candle #11 finally broke the bottom of the range at 1077.50 and price promptly dropped 16 points over the next hour.

You've heard me mention quite a bit this week about last weeks leftovers. (zones that is) Zones from a previous week almost always have some value, but during a week like this one where our current WTZ's are so wide....... they can make for a very tasty snack indeed. If you're going to track previous weeks I encourage you to do so on a different chart to cut down on the clutter. Here is today's price action on last weeks zones on a 10K Chart.

Pray Hard & Trade Safe!

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