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ES #F Absorption followed by Volatility

Yesterday morning and the day before we warned about volatility ($VIX) rising to the 12-point level, which will bring more weakness and that is exactly what happened yesterday. We had a wide range Kamikaze up bar (Yellow bar representing Crowd activity) at the last swing high on the 23rd and on the 24th we had a huge and sudden switch to Buying pressure without price advancing upwards (It moved sideways and down during this Buying pressure development). When price broke the important 2562.50 level a further 21-point down move materialised, which was the result of the mentioned circumstances of the 23rd and 24th (Volatility increasing and Smart money absorbing the demand = Yellow up bar at the high and sudden Buying pressure without upward price movement). Price advanced to a low of 2541.50 Yesterday before rising again.

At the moment Selling pressure is cooling off after the wide range Smart money down bar at the last swing low. The price action after this bar (which penetrated the low of October the 19th and reversed) looks a lot like a Spring formation developing. The sudden pullback (upswing in progress) after the last swing low had Negative Delta volume (Net selling) so far, but is still in progress. The Multi Time Frame indicator is still firing downwards and if we do not get a bar close above 2563.25, some more downward price action can follow. A close above 2467.75 followed by sustainable Buying pressure can get the Bulls on track again. Longer term resistance to the down side is at 2539.75 and 2528. For the Bearish action to continue a bar close below 2546.50 should favour more weakness, but sideways price action from here is also a possibility.

See results of our Strategy on the MTF Tool trading the EURO


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