Today’s S&Ps (ES) didn’t give too many opportunities to trade. Yesterday’s high figured prominently in early US trading, as it often does.
The overnight market sold off sharply (A) after pushing above yesterday’s high, making a new high. Usually, when we see a sell off like this, we would expect the market to move back up to test yesterday’s high with weakness on the rally. After a weak test, and often a lower high, the market continues to sell off.
But here we see demand come in on the up wave at B, pushing price up above yesterday’s high. In typical fashion, the market traded around yesterday’s high without showing much supply. An aggressive long was available at b1; a less aggressive long-side trade at b2. Target: a push above the Globex high.
The rally up to C showed good demand on the Weis Wave, and a small absorption action around the Globex high. We can keep the long trade, or at least a portion of it as no weakness shows itself.
As we reach the top of the trend channel, tell-tale signs of weakness appear. The Weis Wave shows demand tiring on D and E. Longs exit here. A small, counter trend short was worth while for a play back to the bottom of the trend channel.
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