Assessments / Blog

ES #F Supply continued

On the 28th of December (Yesterday) we warned about supply entering the market and to watch for sustained Selling pressure. This is exactly what happened Yesterday and the 2679 level was broken. Comparative weakness has developed, Volume flow is to the down side and the Multi Time Frame Tool is firing down, with Volatility increasing. The result was a 30.5-point ($1525 per contract) move down from the new all-time high at 2698.25, taking out the previous high by one tick. There were several clues, giving clear warning signals:

  1. We had the Pullback/Reversal signal on the 19th.
  2. Negative Delta volume (aggressive selling) on the last two up waves.
  3. Volume flow predominantly down on/and after the last two up waves.
  4. There was no Multi Time frame alignment up, since the 19th and predominantly downward alignments.
  5. Increasing Volatility.
  6. Clear downward divergence on the Simplified Volume Oscillator.
  7. After the up wave that ended on the 27th, there were two mediocre attempts by the buyers to dominate, but could not succeed with follow through, clearly visible on the Simplified Volume Oscillator and on each occasion, Selling pressure immediately dominated the Buying pressure attempts.
  8. Sudden Comparative Weakness on the Comparative Strength tool.
  9. Lower up wave volume on the Wyckoff Wave Tool (No demand) in the last three up waves.
  10. The last up bar in the last up wave to a new high was on very low volume and with all the above taken into account, clearly this was an anomaly.

Follow through to the down side or not, will be key for the next move. On the daily chart Yesterday’s price action looks like an up thrust (price penetrated previous resistance/high and reversed immediately down to close in the bottom half of the bar). Price can move sideways from here and probably will make a pullback upwards, but our next target is 2651.75 if no bar closes above 2679. If 2561.75 is broken our longer term targets is at 2620 and 2605.

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


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