Thursday 12th September ES_F Review


Good morning Traders,

Apologies for the lack of tweeting yesterday, unfortunately some life admin cropped up meaning I couldn’t trade for most of the session. Having run through a replay of yesterday’s session, we had a full on trend day with the market opening, correcting the overnight inventory (which was net long as mentioned in yesterday’s post) before going through the open and rallying for most of the day. I only saw 2 trading opportunities, and that was buying near the low of B period with a stop below the open (4 ticks), and a buy at the low of K period provided you were prepared to front-run the single prints at 2990, with a stop below the high of D period. Trend days are tough, especially when you’re watching a market rally strongly, the thinking is to try and get long (or short) to catch some of the moves. In my experience, the best thing you can do is just get out of the way until something fully structural pops up that you’re confident in hitting. Given I don’t typically trade during A & B period, I wouldn’t have gone long from the point mentioned above, and the low of K would have been questionable for me as I don’t like front-running prices significantly. So there was no trade for me, and that’s really really tough, especially as you’re in the market to make money day-to-day.

Thankfully, overnight, the Globex session offered up some great structural pullbacks to go long from where we can place tight stops and high probability take profit areas. Our educational material covers this stuff in great detail so it might be worth checking out.

Anyway, overnight we’re 100% (almost) net long trading up to a high of 3020 (10 points off the all time highs), we’ve seen a pullback during the last couple of hours as Super Mario (Draghi) has been speaking which is moving EUR/USD around a little. We’ve also had CPI data come out which resulted in a beat.

Today, we need to balance in this new area we’ve returned to (2990-3020) as confirmation that the new zone is accepted by buyers and sellers to do business. Given the rallies overnight, we expect some inventory correction after the open, but we’ll hope for a balancing day. Any return back below 2990 is confirmation of rejection of this new range, and it targets the lower end of that range where there is some gaps we still need to fill. In the context of the big picture, we have a vacuum above 2947 and there’s no resistance, meaning the futures will really move, especially to the upside. As I’ve said many times, nearly every time-frame trader has been flushed out over the last 3 months. As a result, we’re almost starting again as positions begin to accumulate. Tuesday’s trade told us a lot, especially with the lower end of the profile between 2959-64 where a lot of volume got hoovered up, most likely by another time-frame participants – this was a signal that price action going to move higher over the coming days.

We’ll use A & B period today to get our clues for what type of day is going to unfold, we’ll look for trade back & forth through the open which may indicate that we’ll have balance. It looks like we’ll have a gap to the upside on the open of about 6 handles so we’ll look for a close of the gap during A & B periods, if we fail to close the gap, we’ll then look for trades to the upside. I think the best plays today will be at the extremes of the profile in the latter half of the day if we confirm we’re in balance.

Key levels:

Yesterday’s High – 3002.50

Overnight High – 3020

Overnight Low – 3001.50

Single prints – 2997

Single prints – 2989.50 (close to yesterday’s 1/2 @ 2988.75)

If we break the overnight high, the all time high of 3030 is the target.

Good luck!