YM, ES and DJIA Analysis

[brownsfan019 17]

It could be a tempting long James. I'd prefer it to have come down more, but the market waits for no man.

[james_gsx 16]

It surely wasn't the best looking candle.

 

But now, the market is back down - as usual

 

 

A few things I didn't point out about the "hammer". It wasn't really a great risk/reward seeing as how there are a few moving averages just in front of it, and the risk would have been too great.

[brownsfan019 17]

It could be a tempting long James. I'd prefer it to have come down more, but the market waits for no man.

 

There you go. 2 hammers on the daily.

 

I would have liked it to come down a little more actually but nice hammers on the daily *near* my support level.

[james_gsx 16]

I apologize for not being quite so active in here. These injuries have really taken me out more than expected. I know, it seems like it would be nothing to sit in front of a computer with a messed up leg and foot, but it really takes a toll when I have to be on my feet all day.

 

With that aside, let's talk about the ES. Some interesting price action this week, well not really. Of course the double hammers proved to be accurate. But that was then and this is now - real time.

 

On the daily we closed above the 100 EMA. Two immediate things stick out like a sore thumb.

 

1 - Every newbie in sight has been screaming we closed above the 100 EMA. So I went ahead and circled all those fake outs.

2 - Look at that long wick at 1400, shows some sellers came in. There is also a huge lack of volume that I would personally want to see for a breakout of such a big level. But that's just me.

 

I could be looking at this all the wrong way. My bearish bias could be taking hold of me and I could be missing something here, but I don't think so. IF we close above 1400, then we would have a double bottom and could see 1550. I think that breakout would be a huge win for the bulls.

 

As of right now on the daily, the better risk/reward trade would be to short at 1400.

 

 

Weekly shows a similar story. Resistance at 1400 and lower volume than I would like for a potential breakout. You should also notice the 100 EMA acted as resistance on the weekly. Just by looking at these charts, some bulls might be set up for a minor heart break. But if that resistance level breaks with strong volume, then I will obviously become much more bullish.

 

[MC 10]

 

I like the analysis James, I see a few things different this go round though. I added the orange arrows and trendline.

 

The prior break of the downtrend never had a wave bounce off and successfully test that trendline. We have a leg above the downtrend now. A full leg because last time a higher high was not made, here there was a higher high and a higher low above the downtrend.

 

Also I noted the ema's you're running had the fast blue line fall below the red line last fake out, but here it has stayed above.

 

As for the low volume, thats a good thing IMO. We don't want to see volume spike at overhead resistance, that would be distribution no?

 

I can't lie though, I'd feel a helluva lot more comfortable if there was a test of the lows with divergence. This is why I love the market though, history often doesn't repeat itself and we have to be on our toes.

[trader273 10]

[james_gsx 16]

 

Also I noted the ema's you're running had the fast blue line fall below the red line last fake out, but here it has stayed above.

 

As for the low volume, thats a good thing IMO. We don't want to see volume spike at overhead resistance, that would be distribution no?

 

I can't lie though, I'd feel a helluva lot more comfortable if there was a test of the lows with divergence. This is why I love the market though, history often doesn't repeat itself and we have to be on our toes.

 

Good analysis, thanks.

 

One thing I have noticed about the 8 and 21 EMA (the blue and red) is that they are great in a trending market, but when we are range bound they tend to be slightly irellevent specifically the 8 (blue).

 

About the volume, I'm not exactly looking for a volume spike. But I would rather see a gradual increase in volume leading to the breakout. This would tell me that there were more buyers prior to the breakout. A high volume spinning top at resistance would be bearish, but leading up to the resistance zone and a WRB through the resistance on strong volume would be bullish in the "longer term".

[neustaju 10]

Check out the Put activity on ESM8 while it is at 14010-1417 Apr 28th-May 2nd. T&S should reveal 500+ lots of short contracts being taken out with single prints. 1305 INDU closing prices.

[smwinc 20]

 

I tend to disagree with the bearish tone of the majority of the posts here - we haven't really seen 'strong' volume in any of the US markets or European equities indexes (DAX / ESTX50) yet. Perhaps I'm a little hopeful, but I'd like some good news intraday, or an 'event', which gives some nice capitulation to the upside.

 

..........................

 

I'd like to see us head up towards 1415's in the S&P.

 

We have an area of confluence broadly from 1410 - 1430. That is where I would be comfortable buying puts.

 

But perhaps I'm too optimistic. I'm sticking to daytrading that's for sure !

 

Good luck

 

I posted that on the 9th April. Seems I wasn't the only one thinking of buying puts up here.

 

We will probably slowly gyrate higher into October eventually. However, don't forget good ol' "Sell in May and Stay away"

[james_gsx 16]

I'm still waiting for 1400 to be broken. It's against my rules to buy in front of resistance. Until then, I still view this as rangebound. Sure there are plenty of things that are in place that SUGGEST price COULD break 1400. But it hasn't happened yet. Price is king, and price is yet to break that level.

[smwinc 20]

I'm still waiting for 1400 to be broken. It's against my rules to buy in front of resistance. Until then, I still view this as rangebound. Sure there are plenty of things that are in place that SUGGEST price COULD break 1400. But it hasn't happened yet. Price is king, and price is yet to break that level.

 

Yes. I realise I'm getting a little off-topic here, but there is a financial writer than I'm a real fan of, John Mauldin. He continues to refer to the U.S as a "Muddle Through Economy". He is usually right on the money, and I think it's a good way of explaining what is going on.

 

The ES has been "grinding up" since the 22nd January - this entire year to date.

 

Since this is the Candlestick forum, I better refer to them :-)

 

To mix it up a little, I thought we could look at the Bund. Different market, but still clear implications for the ES/YM.

 

I've attached 3 charts of the Bund that I referred to in the Chat yesterday.

 

Chart 1 - 3 pictures of the same Daily chart, "scrolling through" the days. You can see that at the time, there was very clear strength, however as we progressed the strength was broken, Hammer after Hammer. Difficult entires.

 

Chart 2 - basic picture of the Daily Bund chart as it stands. We keep seeing strength, followed by failure. To me, this chart looks like it just wants to rally, but for whatever reason, it's not. You can literally count 3-5 strong bullish hammers that would be a normal "get ready to buy" signal, that failed.

 

As the Bund is (all else being equal) inverse to equities, the implications is similar for the ES but in opposite. The US market is weak, but it keeps limping higher.

 

Chart 3 - taking a step back and looking at the monthly Bund chart, you can see this is still a very clear long-term trend UP. If the US is really recovering for the long-term, this chart needs to be bearish. As I mentioned on the chart, I'll be keeping an eye out for any signs of a breaking of a building triangle to the upside.

 

Cheers

[james_gsx 16]

I definitely agree with your analysis, and to be honest I think we will break 1400. The US Dollar is looking stronger, and energy is actually starting to look a little weak. All of this has been setting up the markets to pop, but as I've said my rules won't let me buy until we break that resistance. Once we break it, I am all in.

 

 

 

 

 

Should get interesting in the next week or so.

[erierambler 10]

I definitely agree with your analysis, and to be honest I think we will break 1400. The US Dollar is looking stronger, and energy is actually starting to look a little weak. All of this has been setting up the markets to pop, but as I've said my rules won't let me buy until we break that resistance. Once we break it, I am all in.

 

Should get interesting in the next week or so.

 

Using charts that everyone else is watching could put you behind in trading.

The actual breakout occurred on April 16th and was tested on the 22nd. Be careful going all in when the crowd sees fit. Of course the move up could be very real , but it is too early to tell for sure. We will be approaching a previous top in the future to challenge.

erie

[james_gsx 16]

Using charts that everyone else is watching could put you behind in trading.

The actual breakout occurred on April 16th and was tested on the 22nd. Be careful going all in when the crowd sees fit. Of course the move up could be very real , but it is too early to tell for sure. We will be approaching a previous top in the future to challenge.

erie

 

By all in I meant I would be bullish. Not that I would put money in the market.

 

You could argue that the breakout was on April 16th, but then why the sudden resistance at 1400? Not to mention the psychological significance of 1400, I would rather wait for that. But that's just me.

[erierambler 10]

By all in I meant I would be bullish. Not that I would put money in the market.

 

You could argue that the breakout was on April 16th, but then why the sudden resistance at 1400? Not to mention the psychological significance of 1400, I would rather wait for that. But that's just me.

 

No argument that the breakout was on the 16th, not looking at my own chart. You are looking at your chart. Depends on one's perspective.

 

[james_gsx 16]

Yup, each perspective is different. Weekly on my chart shows 1400, so I'm going with 1400

 

No trade setup yet, will be patient and wait for one. Good news for the bulls that we closed above the 100 EMA on the weekly. So the possibility of more upside next week is pretty good IMO. But what do I know.

 

[erierambler 10]

Yup, each perspective is different. Weekly on my chart shows 1400, so I'm going with 1400

 

 

Good trading to ya......

erie

[zeon 10]

No argument that the breakout was on the 16th, not looking at my own chart. You are looking at your chart. Depends on one's perspective.

 

 

And what about the strength in the transports? There doesn't seem to be a downtrend here...

[erierambler 10]

And what about the strength in the transports? There doesn't seem to be a downtrend here...

 

Yes, but the topic may well not be suited for this thread.

erie

[DbPhoenix 42]

Yes, but the topic may well not be suited for this thread.

erie

 

Given that the thread is in the candlestick forum, a more appropriate focus might be how candles would have prompted a trader to buy the reversal in March. BF revitalized the thread at that time by noting the test, but there seemed to have been a concern about all the resistance. Of course, there's also a lot of resistance facing anyone wanting to trade any sort of BO of this range, and failure is much more likely not only because of all the overhead but also because those who bought the reversal will be scaling out.

 

There was also a concern about holding overnight, but this will all happen again, so I suggest for the future that anyone trading the ES consider buying SPY alongside in order to take advantage of those opportunities which he might otherwise feel forced to pass by from a daytrading perspective.

[NeoTrader 10]

I've been following along with this thread for quite some time and just thought i would throw in my EXTREMELY noob analysis for the ES. This chart covers the last 5 days with 15 minute candle

 

be gentle :embarassed:

[brownsfan019 17]

I've been following along with this thread for quite some time and just thought i would throw in my EXTREMELY noob analysis for the ES. This chart covers the last 5 days with 15 minute candle

 

be gentle :embarassed:

 

Not bad Neo! Welcome aboard the CC Train.

[NeoTrader 10]

Thank you!

Looks like its on the way back up now.

 

These boards really are invaluable for knowledge. Have learned volumes here.

[firewalker 10]

I'm not a 'candlestick' trader, in the sense that I trade off candlestick patterns. But sometimes they help me show the effects of buying or selling pressure more visually.

 

This is a bar chart I posted yesterday (in the traders log forum), where I mentioned that the action was a warning signal more downside could be imminent. Daily bar chart from YM:

 

 

Chart shows the rejection and failure to make a new high. In this particular example the bars peaked "outside the normal range"... easy to spot. I've also included a candlestick chart for comparison, as this is after all, the candlestick corner

 

So, my question the candlestick fans, what extra information do you get out these charts as opposed to bar charts or line charts for that matter?

 

Edited May 21, 2008 by firewalker

[james_gsx 16]

Chart shows the rejection and failure to make a new high.

 

You answered your own question :o

 

But to more extent of your question, it does show that sellers came and rejected the price. In your second circle, you see a doji, then an "inverted hammer". Basically what that is telling you is that price reached it's tipping point so-to-speak, then fell the next day. Those two candles together were a strong signal that price was being rejected.