The key reference areas for the ES on 10/10/06 are as follows...
The ES is in a 3-day trading range from 10/5 to 10/9. See the composite profile in the first chart below. The upper limit of the bracket is
1362.75-1363.25 and the lower limit of the bracket is
1352.50-1353.25. The high volume node is
1358.50, which is near the middle of the distribution. I am expecting the bracket limit(s) to be tested tomorrow. If a bracket limit is faded (i.e., a responsive trade), the target will be the high volume node (or middle of the distribution). However, I will keep in mind that if one of the bracket limits is rejected, the market may trade swiftly to the opposite side.
It is important to note where the ES is in market development. In the longer-term, the ES is in an uptrend. See the second chart. However, if the ES were to trade below the lower bracket limit, the next downside reference areas are the low volume area/single prints of 10/4 around
1351.25-1350.75, and below that is a key reference area between
1346.50-1348.25, which contains the high volume area of the composite of 9/27 to 10/2, the high of 10/3, and a low volume area on 10/4. Note that the key reference areas to the downside are well-defined.
Next, I look at the daily profiles for the ES in the third chart to review the market structure. It is noted that there is a buying tail on 10/9 around
1355-1356, which is also near the
POC of 10/6. This is also a key reference area. As always, my approach will be to monitor market internals as the ES approaches any of these key reference areas.