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ES Thu 8-11-11


This is the ES at 8:30pm ET on Wednesday. On yesterday's ES topic I called a buy at 1148 or 1148.5 based on the single print and VAH but that call was nullified because we opened in the value area and the Initial Balance (IB) was formed inside the value area.

Market Profile theory looks for a day to be contained inside the value area when the IB is formed inside the value area. The market followed the theory and traded mostly inside in the value area and you will notice that the value area for today's trading is now, as a result, inside the previous day's value area.

Even though the market traded off the value areas it was, in my opinion, a truly scary market to trade off those lines with such fast markets and such a large range.

Have a look at the 5, 10, 20 and 40 day average ranges on this page:
http://www.mypivots.com/dailynotes/symbol/445/-1/e-mini-sp500-september-2011
We don't often see 70+ average ranges over 5 trading days.

Had you shorted the 1148 VAH on Wednesday you would have suffered through a 9 point draw down (or been stopped out) however the VAL target was only 1.5 points above the low of the day so you couldn't have wanted for a better target down there.

Click image for original size
ES for 10 August 2011
looking for shorts up here near 49.....best thing that could happen is if they blow through it....then I will trade for the retest back down into it...hoping to get a chart up later of how I'm doing it these days in large volatility
air pocket through a key number...u just gotta love it!!
yesterday in a bunch of emails that I copied folks on, I was rambling about the low volume numbers. in my haste I left out the third scenario...so let me post these here to what happens at the low volume zones.


1) the market blows through it but then comes back for the retest
2) we edge higher or lower but big traders come in right at or very close to the number and we sell off or rally depending on which side we enter a key low volume zone.
3) We jerk araound and donot get the move we anticipate and the market accepts price there......then you donot trade for a retest once it breaks away from there...odds donot favor the retest in that situation

so look at 37.50, 24.50, 42.50 and 49......and then read what I just wrote above...c if it makes sense to you...

I personally like the blow through and retest.....so I'm calling them Blow thorugh numbers BTN's...since everybody love acronymns....I thought I'd make up my own



so if the 49.50 fails now we will go back for the 42.50 and then the 37 - 38 area...


edit : one last thing....the best trades will happen the FIRST time one of the above scenarios takes place. so don't keep buying or selling an area unless you have a great read on order flows and volume..
37 - 39 is the low volume zone that is created from todays developing trade...so we need to be aware of that....if we trade down there some will try buys into that zone...best to get out ahead of that area unless you have good volume data and really understand low volume..
here is the area I'm trying to get to and how my chart has looked today...note the low volume as per the histogram on the right in the 37 - 39 area
Click image for original size
lowvol
va high is 42.50 so took two off there...last two are going for 40 even
So you like to trade from low vol to the high vol ???
I like low volume back to low volume....especially in this volatility... I wait for th elow volume to run through and then wait for buying or selling to dry up for th eretest back....low risk to me in this environment


would like to see them flush up above this 58 area for the retest back into 55..
hunting now for shorts off 65 to go fill in 58...!!
bruce, thanks for the update, why 58? i have 55 as the low volume node created on the way up...am i seeing it wrongly?

Originally posted by BruceM

hunting now for shorts off 65 to go fill in 58...!!
80 is my last key number.....too late for me though