ES opened and drove to the down side. The odds are really high that we are going to see a material break of the neckline in ES today.

Technically it is a very positive development, but it is crappy situation for me as there is no entry point for me. Maybe there is a small pullback to the 2585 shortly after the break of that level. Without two way trading, it is very difficult to have a low risk entry.

This week is the FOMC week that there is a possibility that the market is going to pop under a dovish FOMC statement. I am a bit doubting the intention of the bears pressing to the down side at this moment. Are they trying to set up a spring? Or they are confidence that FOMC meeting is not going to release anything meaningful.
I think I would be remaining on the sideline until I see clear intention of the market and tradeable setups.

I was wrong yesterday that market is unlikely to trade decisively to either direction before the FOMC. However, it did.
The neckline of the year long M top has been broken no matter how you draw the neckline (from the peaks or from the open/close). From now on, the market is going to enter into a long stampede stage that bears don't have to press their shorts to break the market anymore. The trapped longs are going to do that for the bears.

In this type of environment, all bounces are short entries. All resistance are expected to hold for a long time, while the supports are flimsy to say the least. Hence we, as a short term trader, should trade from one zone to another zone. When there is impulse leg in between, take the break down of the correction.


The center of gravity zone in Cac for the day is at 4780. The SR levels are marked in the chart. We could gauge the bull bear strength by observe how price react to the 4780 level. The best sell is usually when the bulls failed at a key level after they poke the zone through and then quickly revert back down.

Hello,

Can I ask what program you are using and does it really work as nicely as the chart on that screen could infer? At least in the picture it seems to have been pretty fine with the peak and the bottom prices with the bars below the prices. In fact, I'm trying to trade with the Nasdaq index and based on that diagram I'm interested in that program you are using.

Sami

shrekchenbin 

ES opened and drove to the down side. The odds are really high that we are going to see a material break of the neckline in ES today. Technically it is a very positive development, but it is crappy situation for me as there is no entry point for me. Maybe there is a small pullback to the 2585 shortly after the break of that level. Without two way trading, it is very difficult to have a low risk entry. This week is the FOMC week that there is a possibility that the market is going to pop under a dovish FOMC statement. I am a bit doubting the intention of the bears pressing to the down side at this moment. Are they trying to set up a spring? Or they are confidence that FOMC meeting is not going to release anything meaningful. I think I would be remaining on the sideline until I see clear intention of the market and tradeable setups.

Yesterday Cac has been trading in a market maker dealing range pivoted around 4780 for the whole session actively waiting for the Fed. See how perfectly those lines caught the turning points.
I am expecting the same behavior into the FOMC meeting. Without any doubt, today it is going to be another lazy session.

Should that be a surprise that so little has happened in European equities today since the open?
I fell asleep multiple times during the session and lost focus to take advantage of the not many setups in DAX.
DAX is such a technical mover that there is always trades day in and day out.

Now let us shift our focus to the NY open that there might be a bit more tradeable setups. At least I hope so.
In such a market, the primary hypothesis is always range trading, which means we fade the break out or break down.
For example, ES has been trading in a well defined range between 2575 and 2532. I would expect those levels to be held until the fed announcement. Hence, watch the failures at or around these two extremes.


Russell had a deep stop run yesterday made a much deeper lower low, which might look like a down trend channel. For a formation like this, the fib retracement of the last down leg should be considered as significant levels as well. Watch the 61.8 and 78.6 fib levels.

Glad that you like my charts.
I am using RanchoDinero as my charting package. TO me they are the best in the business with a very reasonably priced package on offer.

Samip 

Hello, Can I ask what program you are using and does it really work as nicely as the chart on that screen could infer? At least in the picture it seems to have been pretty fine with the peak and the bottom prices with the bars below the prices. In fact, I'm trying to trade with the Nasdaq index and based on that diagram I'm interested in that program you are using. Sami

Yesterday, ES has resolved the two day pre-FOMC balance in the most dramatic fashion -- a head fake above the range high (essentially a stop run) and slammed down right way for a hundred points.
Since market has shown the way, we have to be respectful to the market by listening to his messages. Today I am going to follow his guidance by shorting the ES at all reasonable locations -- 38.2 fib, half back, prior support. The perfect short would be a 2535, the prior support where buyer came in in the last two days.


Cac has very similar structure to that of ES. So the strategy is also similar -- sell the fibs and prior support.

There is a bit of strength coming in the Russell. The 1355 resistance was taken out together with the pullback high after the FOMC at 1360. This is saying to me that the short term market structure is shifting to the upside.

I see short term buy from 1355 to 1345 to look for 1370 to 1375 zone as the target. Don't do this if you are not willing to cut the trade immediately when weakness is shown. When it trades above 1375, shorts should be taken instead as there is a big bulk of volume trapped. Russell would be medium to long term bullish only if it stands firm above 1400 and yesterday's run down would turn into a shake out.


ES is trading in a range at the low hanging just above 2500. I am going to watch for reaction around 2535 level to consider a short. I would not hold a bullish bias to ES until it takes out the 2580 level with confidence. Below that level, try to look for buyer failure for short entries.


DAX has balanced above the initial balance high. Now it is in the process of breaking down from that balance. Since the volume and participation is extremely light. I don't expect strong price action before the NY open.

As trend accelerates to the down side, there is not many fib test that you could trade of except on the big news days like FOMC. All you can count on is to sell a break down of a corrective structure, just like in Russell yesterday. In addition to the usual suspect of sell the trend line break, an even more sophisticated short entry is to trade like a market maker by targeting the prior swing high/low.
You see, in that consolidation structure, every time a swing high/low is taken out, there is a rotation back into the range. It is a typical behaviour of day time frame player (market maker) in control. It trades from one swing extreme to another and take profit by tapping into the stops behind each swing point. In a thinly liquid instrument, it is the way to release liquidity.


DAX also plays this type of game as it is also a thinly liquid instrument. It release liquidity by moving around and running extremes. That is why market maker loves you to put in a stop that is close to the market. You can show the market makers a big middle finger by entering trades right above the swing points.

After yesterday's blood bath, today the TICKS is not that negative for the EUropean equity (though still operating below zero).
Hence i am expecting range bounding to corrective structure towards upside. There was a rejection already at the retest of the prior day's range low out of the open. First support comes at 4645.