Quick post on a nice setup on the ES (E-Mini S&P) which triggered overnight during the Globex session. We’ve found some of the best trading setups recently have come when the cash market has been closed, particularly when it comes to inventory setups following the cash close.
In this case, we’re looking at a breakout area which occured on Friday 5th June, over the Non-Farm Payroll figure which saw the ES rally higher and never retest the area where it started. This really should be treated like a gap in the market, and a healthy market will look to retest these areas, particularly to the downside. We cover this information off in great detail on our Level Up Sessions. By retracing these areas and performing price exploration, it can serve to confirm or reject the previous move higher. If the market bounces back to the higher levels, it’s confirmation that the move up was supported by buyers & sellers; if price moves back into the zone prior to the break-out, it should be treated as a rejection of the move higher.
In this particular instance, we’ve experience a period of extreme bullishness, where there are sizeable gaps below us. The fact that these gaps haven’t been retraced is called Market Generated Information or ‘MGI’. For a healthy market to move higher, these gaps should be filled, in order to build a solid foundation to support higher prices. It doesn’t always happen, but it’s something we should keep in mind when framing our wider macro view.
Check out the video below for how we found the setup, and what we looked for in order to execute on the position, with trigger entries, stops and take profit zones.
As always, feel free to leave comments here or on the video, or catch us over on Twitter.