Even though the market has been showing a lot of daily price bars overlapping one another recently, there are still levels at which the market can be watched carefully for buying or selling to reveal itself.
In Deep Practice this week, I highlighted the narrow green box on the daily chart as an area that the market could find support, should it chose to return to that level. On Friday, those in the Southeast Asian time zones had a nice opportunity to buy the market in that area for a good move up.
But it’s not just the Asian-European sessions that offer great opportunities in this market. Lots happens in the US session and the hour or two before the formal US open.
I’ve posted a standard hourly chart and a 3,000 tick chart of the S&P e-Minis (ES). Friday, the S&Ps made all time highs (cash market). With that kind of achievement, we might expect the market to continue on up to higher and higher levels. Maybe. But better to let the charts tell the story rather than let my mind lead me down the ‘primrose path.’
We see on the hourly that Friday made a high at 1564.50 in the futures (ES). The last full hour of the day saw some selling (60-minute Bar 1). The day was strong overall and we would attribute this to simple profit-taking and traders flattening out before the weekend.
In the Globex session during Sunday night and early Monday, we see a different story. On the 60-minute at Bars 2 & 3, there is reluctance to rally up. Closes below the middle of the bar in the hours before the US open signal potential selling on the standard chart.
We can see things a little more clearly by coordinating the 60-minute with the 3,000 tick. The first thing that jumps out is the relatively narrow and compressed range of the overnight trading. Traders in Asia and Europe did not take the market higher. Question: Are they re-accumulating to push the market higher or are they selling?
We can clearly see the effort to push up with a definite lack of result from the Weis Wave on Waves A & B. This puts readable meaning into the 60-minute price bars closing below their middle. Selling is keeping the market from going higher.
Aggressive traders take shorts as the market pokes above Friday’s high and fails to follow-through to the upside–a ‘bread & butter’ Wyckoff UpThrust in an immediate background of weakness. The down wave lengthens on an increase in downside volume at Wave C, showing supply hitting the market. This confirms the selling seen in the Globex session. The conservative short entry occurs at D on light upside volume highlighting the fact that buyers are absent and there is no strength to push the market higher. We anticipate further downside. Another short was available as the market became over bought mid-day as it rallies weakly into resistance around the lows of Wave C.
The market falls back into the support level highlighted by the green narrow box on the daily and downside wave volume begins to dry up.
The light volume on Monday ending at known support suggests another attempt to push higher today. Those trading in the Asian and European time zones would look for an opportunity to buy this market as trading unfolds while those of us in the US are sleeping.
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