ES Analysis for 10/10/06

[ant 10]

The key reference areas for the ES on 10/10/06 are as follows...

 

The ES is in a 3-day trading range from 10/5 to 10/9. See the composite profile in the first chart below. The upper limit of the bracket is 1362.75-1363.25 and the lower limit of the bracket is 1352.50-1353.25. The high volume node is 1358.50, which is near the middle of the distribution. I am expecting the bracket limit(s) to be tested tomorrow. If a bracket limit is faded (i.e., a responsive trade), the target will be the high volume node (or middle of the distribution). However, I will keep in mind that if one of the bracket limits is rejected, the market may trade swiftly to the opposite side.

 

It is important to note where the ES is in market development. In the longer-term, the ES is in an uptrend. See the second chart. However, if the ES were to trade below the lower bracket limit, the next downside reference areas are the low volume area/single prints of 10/4 around 1351.25-1350.75, and below that is a key reference area between 1346.50-1348.25, which contains the high volume area of the composite of 9/27 to 10/2, the high of 10/3, and a low volume area on 10/4. Note that the key reference areas to the downside are well-defined.

 

Next, I look at the daily profiles for the ES in the third chart to review the market structure. It is noted that there is a buying tail on 10/9 around 1355-1356, which is also near the POC of 10/6. This is also a key reference area. As always, my approach will be to monitor market internals as the ES approaches any of these key reference areas.

[Soultrader 12]

Excellent Antonio. Its been a tough 3 day session. I am actually waiting for the markets to breakout of the current range.

 

Technically I am stilll bullish. But alot of traders are worried fundamentally and this can be a problem for prices to lift.

 

Going to be looking at the range between 11865 - 11945 on the YM. We have tested both ends 2-3 times already so I am going to becareful on fading these two pivots. Market internals should warn us of any breakouts likely to occur.

[ant 10]

Let's take a look at how the reference areas worked out today...

 

The upper limit of the bracket is 1362.75-1363.25 and the lower limit of the bracket is 1352.50-1353.25. The high volume node is 1358.50, which is near the middle of the distribution. I am expecting the bracket limit(s) to be tested tomorrow. If a bracket limit is faded (i.e., a responsive trade), the target will be the high volume node (or middle of the distribution).

 

The ES opened and traded down to the high volume node of the 3-day composite and reversed on weak market internals, which formed Tick and volume divergences. The ES then traded to the upper bracket limit at 1363.25 where a responsive trade could have been taken with the middle of the distribution as the target. (It's amazing how often these Market Profile S/R levels get hit to the tick.) As the ES traded to the middle of the bracket, internal divergences formed again. Towards the end of the day, the upper limit was tested again. See the chart below for an illustration of the day's action. Note that the ES is now in a 4-day trading range and the key reference areas for today will also apply tomorrow, 10/11. See the second chart for an updated composite profile.

[Soultrader 12]

yep... its amazing when MP works perfectly. Today was all about trading value low and value high. As a matter of fact it was too perfect.

[ant 10]

The ES traded primarily within the 4-day bracket that had formed. The reference areas that came into play today in the ES were (see chart below):

 

• The single prints of 10/9 at 1355-1356.
  
• The upper bracket limit around 1362.75.
  
• The single prints of 10/4 at 1351.25-1350.75.
  

 

 

So the key reference areas for tomorrow, 10/12, are (see chart below):

 

• The upper limit of the bracket at 1362.75.
  
• The high volume node of the 5-day composite at 1358.25-1359.50.
  
• The single prints from today between 1353.75-1351, which also includes the lower limit of the bracket.
  
• The high volume node of the composite of 9/27 to 10/3 at 1348.25-1346-50.
  

 

[Soultrader 12]

Hey Antonio,

 

Was 10/11 a 3-I day?

[ant 10]

Good question James. I think we have initiative selling tail and initiative TPOs, but no initiative selling range extension. So I don't believe that 10/11 was a selling 3-I day.

 

The ES is in a very tight, 5-day trading range and am expecting to see imbalance (breakout) soon. I will be monitoring market internals at the bracket limits.

[Soultrader 12]

Thanks Antonio. I am actually anticipating a breakout today with the gap up and decent volume on the SSF's.

 

Also yesterday's buying presence below value was a good piece of information for me to hold a long bias.

[ant 10]

A picture is worth a thousand words... If the uptrend is to continue, then the previous day's value area should provide support. I would not want to see today's low being taken out. Will look to buy pullbacks...