Head2k

Nice thread, exactly for me. Recently I make a very few trades, because my primary goal now is to stop behaving like an ******* . With this new goal I moved from overtrading to the other extreme. So I miss a lot of entries, even if they are valid according to my plan. I pass them when I am not sure of what's happening in wider context. And I often think of what I CouldaWouldaShoulda done then. Enough for the introduction, here is my passed trade, or actually two of them, from today's NQ cash open: First what I was looking at in my prep on larger scale (5000 CVB chart): NQ formed a range on 6/1 - 6/4. That range was broken up on 6/5, but price was rejected above and returned. After the rejection support was found in the midpoint of the range around 1477. This midpoint also supported price on 6/4, before the break. And in the morning today price was supported at that level again. Now lets look at 5m chart to observe Sunday, overnight and premarket: There are several things to notice. Price is not rejected much on the support. A narrow range or a base developes instead. This base is broken to the upside then, a few minutes before open. The dark green line marks lows of Sunday's range, and it also marks an upper edge of a large bulk of trades in the 6/1 - 6/4 range. So I acknowledged the dark green line as potential resistance. On 1m chart, I marked actual demand line and swing points, and I also noticed that the dark green line acted as resistance just few minutes before open. So what to do now? Price found S in midpoint which already acted as S. Price wasn't rejected quickly, but formed a narrow range. Doesn't scream strength. But it doesn't look like price was hammering support either. Tests are quite fast. And then the range was broken up. The break was slow, nothing violent. In such cases I look for buying a test of midpoint of the range. But the R is so close. What if price doesn't get past it and a stair-step on larger scale develops instead (see 5m)? That would mean returning fully into the 6/1 - 6/4 range. Here I am posting a 5sec chart. The arrows mark possible entries according to my plan, only if I was sure which direction to take. At open I was ready to take the long but didn't pull the trigger. Then I gave up and just watched. The potential short I marked in hindsight, because in RT I was too occupied by thinking whether I should or shouldn't have taken the long. Conclusion: There are two aspects to think of. The first is whether I could have prefered the short. This is a question of analysis. And in hindsight I can of course say I could have. After the breakout of 6/1 - 6/4 range price returned, found S in midpoint and bulls tried up again. But they failed. They didn't get over 1500. And now they are in the midpoint again. Why should it act as support? After that failure to go up off that last midpoint test I shoud expected full rotation down. The other aspect is what to do in such situations when I am not sure of direction (or larger context). This is a question of trading. One option would be just do nothing, like I did today. But then I would need to accept the fact and stop wondering what I should or shoudn't have done. The other option would be enter the long and in advance acknowledge the need of SAR'ing in case that the dark green line acts as R. So that would mean taking both of the trades. What I did today was very different. I was ready for the long but I feared the near R. Hadn't I feared it as an obstacle but accepted it as a possible level for short if the long doesn't go, I could have ended with 1 BE and 1 winner.

I guess you are not timing your entries on 1m chart, so posting a 5s (or whatever you use) could be helpful too, especially to find out why some of your entries are premature. As for the first YM trade, I think you need to define which trend (scale) is relevant for your trade. You say the trend is down, in fact. Which trend? The one marked with the long violet trend line? If so, then ask yourself where is your entry in this trend. Fine, it is near the trend line, but on a retest of it after a failure to make a lower low (14:30 vs. 10:15). If you mean the trend marked with the shorter violet trend line, that one is clearly broken and a trend of that scale is clearly up at the time of your entry (the turquoise demand line). As a side note, don't you have troubles reading dark blue volume histogram on a black background, or is it just me?

For me the simpliest way to tell that the momentum is slowing down and trend is changing into a consolidation is to watch trend lines and swing points. If you drew a trend line you could see that it is broken around 12:40. That should be the first warning. If you watched extent of swing points after that (some of them are marked by white dots on your chart), you coud see that price doesn't make a new high (~12:48 and 12:50). So at this point you can clearly see that you are either looking at a beginning of consolidation or a beginning of reversal. Then it makes a new swing low only by 1 tick (~12:54). So if you are a trend trader, the best thing to do is to wait until the traders who are moving the market show you which way they want to go from this consolidation.

Actually there is a significant difference in those 2 statements. The second statement describes a fact, while the first statement assigns a meaning to it. And that meaning carries some implications. I know the person in question and I think it is great that he thinks in this way. Because even if you just say "oh yea price dropped", you should know what does it mean to you and what implications it carries in a provided context. And by saying what he is saying he bears this in mind. He is not only describing what's happening, he is interpreting it. Or at least that's how I see it.

I believe that this alone is not the way to go, either.You claim that you are trading PA, but it seems that your PA reading is reduced almost only to finding PA based S/R. That's definitelly not all what can be read in PA. You could focus on reading traders' behavior once they approach or reach your level. And that doesn't always necessarily mean waiting for worse price. Sometimes it does, and sometimes you can miss the trade altogether. But in a lot of cases you can have both low price risk and low information risk. But then you must define what you need to see to confirm that price is probably really turning, and how to find an entry after this confirmation so your stop can be tight while still placed in the correct place. Maybe that's a whole new area you could explore.

Thanks for explanation. But I wanted to point out a discrepancy in your rules. In one rule you say that after two consecutive winners you reduce your position size and in another rule you say that after two consecutive winners you stop trading for the day. Or do I get it wrong?

I don't get this. So after a winner you double up. And if it's another winner you revert back to 1 contract or stop trading? And good luck.

It's not black and white. Accuracy is important, of course. The more accurate you are the less risk you undertake and/or the more winners you have compared to number of losses. And if you can increase your accuracy while not decreasing your avg. win / avg. loss, then it definitely helps you. And concerning time frames, a larger bar interval chart is fine for watching what's the situation on a larger time frame, but you can use even 1 tick chart and still trade a large time frame. Time frames or wave sizes - or whatever you call it - are interrelated, and if you understand these relations you can use a fast chart and accurate (high prob. and little risk) entry into a large time frame trade. As for scaling out, I see the main purpose in protecting achieved gains for the case that something unexpected happens, and in letting winners run longer if price goes through the estimated target. If you enter a large time frame trade, or in other words if you want to ride a big wave, then this wave likely won't be smooth and what is more important, you never know whether you really entered on THE wave, whether your target estimation is correct, whether S/R will be found where you expect it and whether it will hold or not.

There is a significant difference between prediction and anticipation. Although English is not my mother tongue and I don't know the definitions of these words as they are written in a dictionary, for trading purposes IMHO prediction means a bias what market will do, while anticipation means awareness and readiness for what market might do.

I disagree. Strong personalities with consistent attitudes always attract conflicts, though it might not be their intention. But this fact does not belittle the value they have offered here.

Given the premarket action so far I will be preferably looking for a short off ~1311. Another option for me is to look for longs in or slightly above 1291-94 zone, if some solid support is found there first. And of course there is 1285.

Clear stairstepping downtrend to me. And on a larger scale the pace of the move is not decreasing. As you say the activity didn't pick up. Buyers have a chance. But will they take it? And if they take it what will they be able to achieve? If they show strenght, violate the stairstep or at least the trend line, or if they stop the decline and let a base to form, then one can start think of buying. Now this would be just catching the falling knife, IMHO. Note: If you trade EOD, you can also consider posting to EOD thread.

Or it is possible to plot simple time histogram to 100 tick chart, for example. I played with tick and CVB charts with time histograms when I was looking for a way to understand price movement. Hovewer, later I found that my brain easier processes or understands simple time interval charts with volume histogram. Anyway, you still get the same information, that is activity over time, or time over activity.What is different in UrmaBlume's approach is imho just a speed of evaluation and hence a speed of his reaction, too. He doesn't wait for 100 tick, 100 CVB or 5 sec bar to finish. That's why the need for a low latency precise data feed. But the principle is still the same: A reversal on high activity.

IMHO it is hard to tell whether we are looking at accumulation or re-distribution, or to say it more down to earth, whether it is going to go up or down. I believe your observaions are correct. Buyers lack effort on the up side but absorb on the down side. This could suggest accumulation as you say. But so far price is definitely not ready to head north, because supply obviously hasn't been removed yet. And maybe it even won't be removed and at some point buyers will give up. If that happens and if they chicken out and start throwing back all that they have accumulated we can see a pretty fast decline. On the other hand, if buyers endure and you see lessening effort on the down side and lifting supporting points because there is nobody to sell to at lower prices, then the accumulation is more likely to be successful. (Bear in mind that I am a beginner.)

www.amibroker.com www.iqfeed.net I would use a PM for this stuff, but since there are more people asking I will write a short post here and we can continue on topic then. AmiBroker (Professional edition) is for $279 one time fee. You have free upgrades for 12 months. (Then $139 for upgrade). AmiBroker was my first choice and I am content with it (though there are some details which bug me). I learnt how to program in AFL (AmiBroker Formula Language) and I like that in AmiBroker you can code virtually anything. Maybe you would like to know that AmiBroker is only for charting and has no trading interface, and if you are considering daytrading, it is good to know that it can display only 5 sec and 15 sec time charts, and then 1 minute or greater. But it can display custom tick, constant volume and range charts, too. You can download a free trial, but I think it is not a professional version, so no intervals under 1 minute and no tick/CVB/Range charts and no real-time data possible. DTN IQfeed costs $60 / month (basic service) + exchange fees for real-time data ($30 for CME e-mini, for example). There is a calculator on IQfeed web site. However, you can plug IB feed to AmiBroker too, of course, and that would be a cheaper option. Disadvantage of IB is slow and quite limited backfill and aggregation of ticks. Though if you use a 5 sec chart you don't have to care of the aggregation. There is one advantage of IB over IQfeed, and that is that IB offers native 5 sec data. IQfeed offers 1 minute data and then only tick data. So if you want to use a 5 sec chart with IQfeed data, you need to keep a tick database. With IB you can maintain a 5 sec database, which is smaller and faster (as AmiBroker has less data to load), considering the same length of history, of course. Or you can keep much longer history with the same database size. If there are still more questions about AmiBroker or IQfeed, please start a new thread in appropriate forum and let me know so I notice it. ------------------------------------------ Db Edit: Rather than make another post, I'll insert here that Sierra Charts costs from $17.50/mo and the IB datafeed is from $10/mo to free. Any other posts relating to this question will also be added here so that any inquiries can be linked to this post. Further questions should be asked via PM or in some other more relevant thread. This is not to discourage questions but to make the answers easy to find.

You're right, it is the same thing. In fact, by what I said I introduced a bias. By "another test" I meant a successful test. So I was biased towards shorts. In the next step I corrected myself and allowed for considering another option, too. Optimal would be to expect a test and have no bias about how it resolves itself. Then it would be the same thing, as you point out. And maybe you are right about that effort thing, too. I just don't know how unlikely. So I try to remain open to all posibilities (though I am biased way more often than I would like). I assume it was an attempt for a rally because price poked up. So bulls tried up and as soon as they encountered first troubles they withdrew, i.e. they didn't continue pushing hard. So yes, they weren't quite sure, IMHO. You need to realize where is this action hapening in relation to the very recent one point wide congestion (1201 - 1202). Bulls are trying up, so it's them who must show effort. Sellers don't need to try to pull price lower, they just take advantage of the bulls' effort and sell at good prices (above that tiny congestion). And the fact that the bulls' effort is lessening forces sellers to sell lower and lower, or they have nobody to sell to. If there is no effort on bulls' side then the sellers might start to be worried that there will soon be nobody to sell to even at current temporary value area (that tiny congestion) and then they are likely to pull price lower. I posted a 5 sec chart first because I wanted to start with detail and then to show how wider context can change the interpretation of what's happening. In reality you would do it the other way around, of course. And if you knew the importance of 1199 you would be probably watching closely what traders do there. I am not quite sure if there is more activity that during the fall between (6) and (7), if you count activity per wave. But yes, as you say, wolume was somewhat high. so what you said is true. What is imortant is how fast price got up, anyway. I can't be of service as this is the type of thing one must test by himself. I wanted to illustrate a gradual decrase in bulls' confidence and increase in bears' confidence. This gradual shift represents different levels of confirmation for shorts (wider context aside).

Ok, so here is an example. Lets have a look at consolidation at resistance. 1200 +- a few points is an important S/R zone and price approaches it from below. Here is a chart showing why 1200 is important. Here is a 5 sec chart of the consolidation (approx. the same moment in time as the previous chart): The thick red line is the S/R level. But in this case it is old and tested many times, and the S/R is more a zone +- 5 points around this level. There is also a trend line of an intraday up-trend which took us to this R. Last swing high before the consolidation is 1199.25 and it is not visible on this chart. As price approaches there is a burst of volume (0) as it gets through 1199 (green line). Apparently there was some resistance, but bulls didn't care - they just shot through it and price continued easily after that, so bears withdrew. Now notice the price / volume spike (1). Bulls' effort was quite big and so was the price advance (result). But what happened then (2)? Where have the buyers gone? Are they just having a rest or are they done? And what about bears? Are they ready to sell as soon as they spot this weakness or are they holding back because they think it is too cheap yet? What happens next is obvious. Bears push and bulls are not able to oppose. Notice how fast price got back and what effort did it take (= also what effort bulls put in to oppose the move). Also notice volume between (0) and (3). It is definitely the highest concentration of volume on the chart. Could it be a climax? Or was it just a healthy push through R and a pullback? At (3) it is aparent that price is not ready to decline substantially yet. Another test of R is likely. Or wait a minute - maybe we just witnessed a retracement after a breakout? There is not enough information to judge that IMHO. Price then advances without much effort spent, it slows down and then wham (4) - supply. But notice that is didn't drop much after that burst either. Then it is supported higher than before with almost no effort. It looks like both bulls and bears need to think for a while. At (5) bulls try again but the rally is checked in the very beginning, and bulls didn't continue pushing. And then again, support is found at the same level as before and again it costs no effort to support the price there. This is one big indecision. Now bulls see that bears aren't willing to pull lower so they try again to push higher. They manage to go higher by 2 ticks (but not higher than the "climax") but then the same story again (6). Notice how fast price returns into that 1 point range. And notice how bulls try 2 more times immediatelly after that (soon after (6)) and at each of these attempts they give up sooner and sooner. So is price ready to fall yet? May be. But notice we are still above 1200 and above trend line. This whole action might be just resting, or forming another stairstep in uptrend. By the time price gets to trend line it is at 99.50, one tick above the last swing high. Price breaks the trend line slightly but it finds to interest below the last swing high (7). Then supporting points are lifted on almost no effort. Rally attempts are checked at 1201, bottom af the last one point range. 1201 appears to be a midpoint of the consolidation and you can draw the yellow line if you want. Price then narrows into 2 tick range (before (8)). At (8) and (9) bears try lower, but there is no force behind it, price finds higher support and easily returns. At (8) and (9) I would say that price is on a springboard (for up side). So now it's bulls' turn. And they come. Notice volume between (9) and (10). Somewhat high but nothing extraordinary. But what is the result? Can you see how fast price rises? This is exactly the case when one can say that supply was withdrawn. At (10) price reaches the high of the "climax" and stops. Notice the effort it took to stop it. Bulls don't seem to be convinced much. But maybe it is just a pause. What about bears? Between (10) and {11) activity diminishes and price moves nowhere. What does it mean? Is this just a pause before the final and ultimate breakout and a 50 point gain, or is it a total failure of bulls to continue pushing? You can't tell IMHO (maybe time factor can help a bit. If bulls stop and bears don't come to take over immediately it is a sign of strenght. But if bulls are still not coming even after a prolonged period of time, then something is wrong). Definitely it is indecision. We are sitting just below R and traders don't know what to do. No push, no pull. No effort to break, no effort to reject. Just before (11) price dips one tick lower and quickly returns. But bulls don't try higher. Instead price bounces from the top of that 2 tick congestion and goes lower again. It looks like buyers are really done and sellers start to gain confidence. (Time for shorts, after all?). Price then finds support in the midpoint of the consolidation and tries higher again. And notice what happens when it tries to poke (12) into that 2 tick congestion at the last high. That is a sharp rejection, isn't it? The bulls who bought within those 2 ticks were very happy they could get out near their entry. And at this moment also notice the turquoise and violet line. These lines mark a border between value of the congestion (area where lies most activity) and testing zones (areas where price is rejected from). So if you were a bear, where would you like to enter to make an entry with the least risk? The upper testing zone would be nice. That might give another reason why the rejection at (12) was so fast. After (12) price hoovers above midpoint, so it remains relatively strong. Clearly sellers are not as confident as one might wish if he took the short after (11). Price narrows into 2 tick range again. But notice that this situation is different than between (7) and (8) in terms of what happened before. After a failure to drive price up (13) price breaks below midpoint (this midpoint marks is in fact a micro S/R caused by all these tight congestions). Price is quickly rejected at (14) but notice what effort it costs. But the effort doesn't continue and there is another failure to escape higher (15). Do you notice how the forces are shifting between (7) and (15)? This was an attempt to use context from recent past when interpreting what's happening. But that is not enough, so let's zoom out to 1 minute chart: Here we see better where we are. And we see that although price broke trend line, it is still above opening high and the last swing high. The trend still keeps its stairstep nature. We can also see that volume doesn't seem so climactic any more, though it is definitely a spike. What does it tell us? If 1200 was so important zone, one could expect more of a fight. Instead of that, yes, bulls try, but it doesn't take a real climax to stop them. And since it doesn't take so much to stop bulls, bears could have some extra power left. But they don't use it either. Price is not rejected quickly. No, it is just stopped and left hoovering above that grey line. This marks indecision and it is a warning. Indecision means a chop. Now lets look at 5 min chart (RTH only) and see what happened yesterday around this level: Can you see how quickly price was rejected above 1199? And what was the activity there? And what happened today? Price got above that level with less effort and it was not rejected. It is unable to go higher though. Now what's the result? The result is IMHO no trade. And finally lets see what the happy end looks like: And a final note: This was all a hindsight analysis from me. I wish I could reproduce it in real time. But that depends on several things. 1) How well one does his homework: What is he prepared for? 2) Experience: What is there to prepare for and how to prepare for it? 3) Calmness: Even if one is prepared, does he remember it and is he confident and calm, or does he change his plans impulsively? Etc. (Just some my problems I am aware of.) Hope it helps a bit and good luck.

That's not what I was saying but it's true. Though I wouldn't use the term "path of the least resistance" but rather path of more interest. Traders are more interested in higher prices. Then it depends if price actually makes new highs, that is whether we are getting those higher prices. That tells you whose interest is stronger.

Thank you for listing me among those who "who understands the dynamics..." but my understanding is far away from the other mentioned people. I just wanted to tell you that I had almost the same problem as you, and to large extent I still have it. And I believe the solution to your troubles lies in understanding Support and Resistance (and maybe Trend as well). I suggest you to study Db's interpretation of AMT. To elaborate, your problem is that you think of price and volume action only in little context. Price and volume action has no meaning if you don't consider where it is happening, what happened there before and what happened (even elsewhere) in recent past. It is easy to say it like this but it is hard to understand what it means, or how to interpret the context and price/volume action within it. I suggest that you stop thinking about price/volume action and start thinking about behavior of traders (bulls and bears). Think of what they are trying to accomplish, what effort they put in to accomplish it and how they succeed. Compare their behavior now to their behavior in past. Did they accomplish what they wanted? If they didn't succeed it on the first attempt, did they give up? Or are they trying again? And if they are, is their conviction stronger? Is it weaker? And again, how they succeeded? Understanding Support and Resistance tells you what there is to be accomplished and helps to make the shift from "watching price dance" to watching the push and pull, or effort and result. I know that what I wrote is quite abstract, but give it a thought. Now to your questions: 1) Why is increasing volume on rallies a positive thing? It is positive if bulls showed their conviction, bought all there was to sell and kept price advancing. I underlined the important thing. Both buyers and sellers are becoming more active if volume is increasing, but the result is important. And again, this is not the whole equation. One also needs to ask why there was more to sell and what bulls accomplished with this rally. What they got through, if anything? Where they stopped? How they stopped, or were stopped? The result in the "effort and result" relation is not only that "price advanced", but much more. 2) Bullish vs. Bearish Springboards I'd say that a springboard is not the consolidation (acc. or dist.) as a whole, but that it is one specific moment near its end. It is a point where one side finally gives up (IMO it doesn't need to be the same moment where the other side aggressively takes over). To tell the accumulation from distribution and to notice when price is on a springboard one must know where this consolidation is taking place (in relation to S/R), and watch what is the effort vs. result at or near its edges. What are bulls and bears trying to accomplish here? How hard and how many times they try? How they succeed? What is the response of the other side? 3) How can you tell the difference between low volume indicating a change in direction and just a pause in the current move? Again context. And Effort vs. Result. If price is at R where we witnessed a climactic action before, a low volume reversal indicates a lack of buying pressure. But after the same climactic action, if there is clearly no interest in lower prices and then price approaches the R on low volume and there is no or only little response from bears, it might mean they withdrew. 4) Overbought / Oversold I am not quite sure, but try Trend thread. I believe W used trend channels to tell these positions. But there is no magic. Simply if price moves too far and too fast from its value, then it is in oversold or overbought condition. Assuming that is doesn't take the value with it. The value can be static (horizontal zone) or moving (channel). I hope my observations might help you a bit, although I am only a beginner like you. If somebody more experienced wants to elaborate I will be only happy.

1. The most aggressive entry (IMHO). Given the data available on this chart I wouldn't use this entry. But if 1.3030 was a former S/R level and not only a swing point, nr.1 would be a perfect entry because of its distance from support. Stop loss could be placed either below 1.3015, or even below 1.3030 (but that's a bit risky). 2. Provides more confirmation. I wait for a result of that congestion. But then I am entering in the middle between support and supply line and stop must be the same as in case of nr.1. And what is even worse, I can't hope to move the stop to BE until the supply line is broken. And again, unless 1.3030 is former S/R level I don't see a justification for this entry. 3. Even more confirmation. Entry after a successfull test of 1.3030. Nr. 3 could be as well right on the break above the congestion. This entry is probably better than nr.2, because now the support is confirmed and stop can be safely placed right below the congestion. And even the entry price is the same as in case of nr.2, the risk is smaller. 4. Entry in anticipation of breakout. Given the successfull tests of the top of that congestion, a contraction of price action and the higher supporting point of the last test, I could enter here. But I probably shouldn't, because it is too high and before the actual breakout. So if the breakout fails, at least for the time being, I am left holding the bag. And where should I place my stop? One option is below 1.3045, which is a midpoint of the hinge and also a top of that congestion. Another option is to put it below 1.3030 again. In the former case there is higher probability of being stopped if the breakout fails (since the stop is only below midpoint and not below support), and in the latter case the stop is quite wide. 5. Breakout above supply line and the last swing high. The most confirmation and the worst price. In this case I would place my stop below the midpoint of the hinge, that is below 1.3045. Again a wider stop, but maybe justified by probability of the desired outcome. 6. Retracement after breakout. Same price, same stop, a bit more confirmation. 7. Re-break. So much confirmation that it implies a very wide stop. Too late entry IMHO. There is probably more opportunities to enter, but these are the ones I would be thinking about.

Looking at sloping demand and supply lines I would notice that the angle of the demand line is more acute. Bulls seem to be more aggressive than bears. The first thing that would draw my attention would be the quick rejection below the lsl and the congestion after it. That would tell me that 1.3030 is somewhat important, since price was sharply rejected below and bulls then absorbed all there was to sell during that congestion after. Yet price didn't make a new high, so I would be curious if 1.3030 holds again. The first red arrow marks this test. Not only the level holds, but price is not even able to get to the bottom of the congestion and the rejection is again quite sharp. Price bounces above that congestion zone and then tests it from above (not the second arrow but the shallow pullback before). This whole action confirms the importance of 1.3030 and suggests strength. Yet another failure to make a new high. At this point I would probably notice the hinge. Price than falls again but it finds support on the top of that congestion again (and now also at demand line). It bounces slightly and tests downside again, finding support even higher. This contraction of price action would suggest that the hinge is probably coming to its end. And having observed the importance of 1.3030 and the manner of lifting of levels where bulls engage (and having the advantage of hindsight ) I would bet on the bulls. From the test marked by the last arrow price advances rapidly, showing bulls' conviction. That confirms the analysis made before and suggests the upside breakout.

Not quite sure if this is what was expected, but here is my attempt. I hope you can still see price behind all that mess I've drawn there.

The morning springboard.

Sorry jcavalieri, I've got recently a lot of my own trading stuff that I want to sort out. Anyway, I think your analysis is basically correct.Price opens (or breaks through?) above recent range, but it is hit with supply and then it is unable to hold. It falls through the last range like a knife and breaks through its bottom. The first pause comes below support. Sellers take a break, but buyers aren't able to produce any bounce. Suggests severe weakness. Notice that volume remains quite low, so the pause wasn't a result of some major demand. Price then continues down, makes another tiny swing and plumets again. Supply line is broken between points 7 and 8 by the technical rally, but then the test of preliminary support fails. Just one remark to points 9 and 10. It is indeed a potential climax and test, but there is no technical rally in between. That means that buyers didn't show any interest appart of stopping the decline. For making a trading decision it is probably better to wait for more buying interest to show up. That would mean buying the test around noon (if buying at all). But I am not the expert here

I don't follow ES, but maybe this CVB chart can be of some help. The red circle is approximatly your entry. In fact ES forms a nice channel, though clearly aparent only in hindsight.