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Day Trading Support/Resistance Levels on the E-Mini S&P500 Futures
Search for Price Action Swing Pro in the downloads section. I believe DT made some slight modifications to it(color based on volume if I remember correctly)
I added a video into another thread - it's probably worth a look for people interested in this as it was a typical "watch it reverse and then take the first pullback" entry.
The level itself was just an LVN but that bounce + the delta move accompanying it, made me feel a reversal was in & a long bias was appropriate.
Thanks for the really interesting thread DT! It definitely helped me to better understand what's going on in the mind of a BSD, and it makes a lot of sense. I came to this thread because, last week, the CL strategy that I'd been finding success with faltered big time...which, as we all know, is a horrible confidence-busting feeling, especially for a new trader like myself. Although this thread focuses on ES, I have no doubt that the premise is applicable to all instruments.
My question for you is: Given the fact that there are likely a large handful of BSDs operating with their own individual agendas, there must be identifiable market traits that would lead them to exploit S/R trading at key times (i.e. all of last week for CL) while passing on others (i.e. the 4+ weeks prior to last week). I understand that if they did it all the time during non-trending markets, most S/R strategies would either cease to exist, or at the very least, be very very different. What I do not understand is that if there are many BSDs throughout the market, you would think that at almost any given S/R level a few of them would be trying to exploit the strategies you outlined throughout this thread.
Based on a limited sample with my CL strategy, it seems odd that my trades would all be fake-outs for an entire week after working at 90% success for over a month (small 20 trade sample size, I know). The more likely explanation is that there is a different market condition at work that I am not seeing (unless all the BSDs are all coordinating together, which is obviously not the case). There must be specific identifiable reasons why their strategy was to exploit my strategy for just last week while allowing it to be a success previously. Since all the BSDs are not working together and plotting which week to prevent S/R lines from adhering to our expectations, I'm left with the question of why are the S/R levels during some weeks more exploitable than in others? What leads BSDs to pull the trigger and exploit nearly every S/R level for certain blocks of time while leaving others alone? With all the BSDs in the world, you'd think that surely at least one or two would be looking to exploit the smaller traders at every S/R level.
Well - if it helps, trading the ES has been pretty tough the past 3 weeks because we've seen it churn huge volumes at levels without much movement. Half the battle is recognising this.
With the above in mind, here is what I think:
- If ever S/R level was 'manipulated' - in the sense that they catch a move off a high, absorb a lot of sell amrket contracts and drive it up again, then the market would become very predictable (but in a different way) and these guys would be taken advantage of.
- You need certain market conditions to game an S/R level in the first place. For example, you'd have to be quite brave to do it in a one way - news-driven market
- Sometimes these plays don't work because no-one gets suckered in. I've seen this a few times, you see the fakery but no-one falls for it.
- Sometimes these plays do sucker people in but some bigger fish comes in and catches the manipulator out anyway
In short, there's lots of reasons it won't work for them and like anything else, you pick a side and place your bet.
I don't trade CL, I have done for brief periods in the past but I'm not very good with thin markets.
For the ES, I do have to make a call every day on what type of day it is shaping up to be. With the churny days we are having where we can sit on a level, trade 15k contracts, move up 2 ticks and trade 10k contracts, best thing for me to do is stand aside. I do fee
Other days we'll have one way markets (1-2 in 10 roughly) but most days we put in 3-4 up & down swings of 8-12 points and end up going nowhere. The mix has changed in the past few weeks but will change back.
Anyway - when you say the S/R levels have stopped working in the past few weeks - is there anything about specific days you have noticed that makes them work better/worse in this respect?
- Where the market opens - within range, above/below range?
- What new announcements are due such as inventory levels and how it acts before/after the news? I presume CL will be impacted by both economic and energy specific events. For ES, the market can be dead when there's a 9:55/10am announcement looming
- What the overall volume is relative to norm
- How close you are to the rollover?
I'd be looking for something external to intra-day movement to help you define what sort of day is shaping up.
Good job DT. A drawn ES 240 minute chart from this weekend revealed the following monthly view beginning
January 15 - February 15. Note the High Volume at 1495. This price at least will be revisited on the first selloff
Thanks so much for the detailed response DT. For the most part, these are definitely the questions I try to ask myself each day. I'll be trying a bit harder to do my pre-open research pertaining to external intra-day movements because that is not something I presently do to any great extent.
After last week, I am also trying to ask myself the question "What is a significant S/R point and what is an insignificant one?". I prefer to set S/R zones rather than lines, and ideally my zones should be about 6-10 ticks wide. However, throughout last week my zones were significantly larger than that (13-18 ticks), and it made me feel uncertain even before I started placing losing trades. The uncertainty of those zones should have raised some red flags for me.
Looking back, there was nothing unique about the daily volume for any of the days this week. I also briefly looked in to the volume at my entry points, but did not see anything alarming. I trade on a 512tick chart, but changed it to 5min to look at the volume for the period.
One thing I did not piece together until today is that the market is trading at levels it has not seen since mid September of last year. As it is not trading at any macro S/R level, this may be a possible explanation as to why there seems to be so much uncertainty at short term S/R levels...although I don't think it paints the full picture. See '500 day chart' and '60 min chart' screenshots for details.
Last week had a bit of everything from strong trending to range-bound days. One constant was that nearly all of the S/R levels that I had drawn out experienced some sort of fake out before going in my direction (or occasionally moving against me entirely). A few things I think I need to take away from last week are:
a. Don't trade wide S/R zones
b. Work harder to identify trending days and don't enter positions against that trend
c. Work to gain an understanding of how the market trades once it reaches certain macro levels it has not seen in a while
For my own benefit, I decided to write up a complete assessment of the week based on your questions, and it turned out to be very long and probably not that interesting for anyone not trading CL. I'm also a bit worried that it goes off topic from the point of the thread and I don't want to derail this topic. However, since you were nice enough to pose questions pertaining to my previous response, I decided to include my daily assessment below, along with a couple of screenshots. The cliff notes are detailed above, and the daily play-by-play is below. Here goes:
1. Monday I was busy at work and didn't have an opportunity to look at the market until after the day was over. However, it was an extreme trending day. The market shot up $2 from $95 to $97 with almost no pullbacks. I remember thinking that I probably would have lost a few ticks that day trying to trade retracements, which is admittedly foolish on a trend day. I just don't know if I am experienced enough to easily identify pure trend days in real time just yet, but I feel like days like this will definitely cost me if I don't learn how to recognize them quickly. External intra-day analysis should help me a bit here, but there's probably no substitute for experience when it comes to this.
- The market opened right near the low of the previous Friday's trading range at a very strong support level.
- An interesting takeaway from Monday was that there were no significant news events that triggered the upward trend. Really, the same can be said for the entire week. I ritualistically check the economic calendar before I open NT and try to guess the direction of the day based on the news (with a pretty high degree of success thus far during days with important news/reports) but could not find anything substantial at all.
- The major volume seemed to roll over on the 19th, so last Monday was a week from rollover.
2. Tuesday was most certainly a sideways day. Aside from a continued rise in price between 4am - 8:30am, the market traded within a 60 tick range all day. I placed two trades on Tuesday, both sell orders at the exact same level because I was convinced that the price would break downward if it reached that price. My first trade stopped me out very quickly, and my second trade reached 1 tick away from my stop loss before rallying to reach my target.
- Again, no significant news
- The market seemed like it was trying to figure itself out after the previous day's big rally.
3. Wednesday the market opened higher than the previous day's high, but quickly made a lower low and lower high, and then appeared to bounce downward off the previous day's high. I placed a short trade about 15 ticks after the bounce, hoping for a 10 tick gain (knowing that 15 ticks after the bounce is a stretch), but picked the low of that short-term move. The market moved back up almost immediately to stop me out and continued upwards for an additional 30 ticks before reversing near the high of the day...the market then moved 90 ticks down. This all happened within about 10 minutes. I justified my trade by telling myself that I was right about the direction of the market, and that only my timing was wrong, but I should not have taken this trade where I did. My belief in where the market was going led me to stray from abiding by the rules I set for myself pertaining to where my inidcators have to be before I open a position. It was the one trade all week that I deviated from my normal approach, and I got punished for it.
- Ultimately, Wednesday was a 140 tick downward day that opened above the previous day's high and closed below the previous day's low, but the trend was not as pronounced as Monday's. The market dropped very quickly from 10:30am - 10:40am and then moved sideways (slightly upwards) until 12:30pm before a second large drop leading in to the close.
- See above screenshot for details
4. Thursday was an inside day - Opened, closed, and never traded above or below the previous day's range. I placed one trade and was fortunate to make 5 ticks off of it because the market reversed immediately afterwards. The only reason I made 5 ticks was because I made a trade on the ES the day before and my DOM was set for a 5 tick target. Had I not forgotten to change it back to 10, I would have been stopped out.
5. Friday I didn't trade, as my confidence was thoroughly shot. It was a downward trending day that saw the entire $2 move from Monday wiped out. If I had traded, I definitely would have placed one winning trade and one losing trade, and there may have been a couple others as the day went on, but they were at weak S/R levels and I hopefully would have passed on them. The one thing they all would have had in common is that they would have been trades against the trend on a clearly trending day - bad news.
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Again, big thanks DT for this topic and for specifically taking time out to help me gain a better understanding of my personal trading.
