Friday 16th August – ES_F Review

After what’s been a bit of a wild week on U.S. equities so far, huge rally on Tuesday, followed by strong selling on Wednesday, equities failed to push lower with any degree of confidence yesterday (Thursday 15th). The 3 daily VPOC’s from the previous week, in and around the 2850 mark, have acted as a good anchor for long & shorts alike.

Yesterday’s trading in the ES was very telling, it failed to break through previous lows and has printed an inverted head & shoulders in a 30 min time-frame. Resistance to the upside around 2866 (corresponding to 38% Fib) has just been meaningfully broken at the time of writing this post. A huge amount of volume traded between 2844-2855 which tells us that there was agreement between buyers & sellers that prices were fair. I’m off the belief from watching the order flow, that some longer term traders may have scaled out of positions on Wednesday, which may or may not have contributed to the selling tail into the 2820’s region.

When we look at the profile chart, there is very low volume against the selling tails, and buyers quickly stepped in and brought it back into value. With all the doom & gloom about impending recessions, China, The Fed etc., it’s interesting to see that there’s still buying support at these key levels.

I think the bigger picture is that the market tested the lows and couldn’t find any firm acceptance, and is now probing higher to see if it can initiate new buying. Tuesday’s “P-Shaped” profile in the cash session and subsequence Globex session, left a rake of single prints which could be potential targets for those new longs.

Today, ES & MES futures are trading above yesterday’s range & value area – but, as always, we’ll wait for the cash open to gauge sentiment of the market before making any firm decisions. Your plan should be based on scenarios of what could happen, then build out ‘if THIS, then THAT’ trading decisions – always consider what others may be doing too…

Good Luck!