ES 5-13-2011

Friday the 13th! Today some above average volume to the upside. Gap still open to 1354. Lets see what she can do.

we're constantly asking " Are we accepting or rejecting previous ranges" ..Key ones for me are the Overnight range and the previous RTH session range.

So a price that opens above the previous days range will most often try to test that previous days highs....this would be a gap higher open outside of range....so we monitor that previous high if /when we get back down to it...

Key word is "try" to test back to it...sometimes the tests are week and sometimes very stong......


The ability or inability to hold ranges is a crucial/fundamental concept.....Read Daltons blog for more info...let me know if u need the link

we also need to keep track of settlement/close prices...so GAPs are used as a term for both settlement and ranges..I think the Range and the peak volumje areas are more important


45 - 46 is where all the volume is now...and is POTENTIAL resistance now

simple concept..holding above O/N lows and then getting above 45 - 46 is good for bulls...holding below 45 - 46 and the O/N lows is good for bears ..just a real simple filter which may or maynot help you trade

Inside days form 15% of the time so we can also plan where we think the previous days range will break when we open inside it ...so if the O/N low now holds and we can resolve the 45 - 46 then we will see trade above yesterdays highs...very simple but far from perfect

Originally posted by neoikon
Or if there is little or no gap (like today, only 3T), then that means certain things. Such as the PP has a tendency to be violated (doesn't act as strong sup/res). We are hitting the PP now... and it is failing... we shall see...

I guess I should've said "messy". To not trust the PP to be a solid sup/res and to look for other sup/res instead. IMHO...

Hmm, so you're defining it as an open outside the range and not necessarily above/below the settlement. Never heard of that definition. I need to see how often that happens.

For me, when we open above/below the previous day's settlement, there seems to be an attraction to return to that settlement the next day. I feel it is important to be aware of its location and almost abandon any o/n trend as the magnet of the gap fill tends to take over. Of course, I have a long list of rules and things to look for that help determine if the gap fill is less likely to happen or if there will be a long/short setup off the gap fill level itself.

Completey agree on the draw to settlement. My observation is that if the market moves above or below settlement by 10 points or less without coming back to settlement during O/N session there is a strong (80%?) likely hood that it will come back to settlement during the first two hours of the morning session.

Doesn't mean it will always go to settlement but generally it will get within a point of settlement.

When I see that settup I will trade it and then reverse the trade at settlement. Many times those two trades will make my target.

Originally posted by TravelinTrader
When I see that settup I will trade it and then reverse the trade at settlement. Many times those two trades will make my target.

In regards to taking a trade off the gap fill, what I look for is for the $BANK index to gap approximately 6-10 points (great sweet spot). If it fills its gap around the same time as the ES, it will typically act as nice reversal off that settlement (ES).

$BANK had next to no gap and is looking very weak so far today. Unless that changes, I don't expect to see the ES go gang-busters to the upside.

Regarding the gap fill and the chances of it happening, I'm sure this chart is outdated, but I feel it it still useful as a gauge of high, medium, or low chances:

21-page article on Fading the Gap

I sold agressively at 42.50...agressive for me because I am a fader so I was selling weakness...but the conditions where that we are rejecting 45 - 46 and getting back under the O/N low to target new lows....now if lucky they will go for the gaps int he data from yesterday at 38.50...36.75 is where buyers began buying yesterday

taking something at the 40 air pocket from Yesterday...holding 3..

Has anybody read Understanding Gaps by Scott Andrews? If so, please could you kick of the reviews of this book as we don't have any yet:

http://www.mypivots.com/book/review/120/understanding-gaps

one for neoikon. I was playing around with your pivot retracements over the weekend and they are useful, here is EURUSD about 10min ago, respecting the stretch and 61.8 of pivot range. Very cool