DOW - ES Charts 04/11 - 08/11

ChartMan

Legendary member
5,580 46
Finally the breakout..... not quite 8800 but there we are. It's nice to be still getting in the ball park having moved over to ES... Recognising the strong close on Friday was very useful, showing that the DOW still sticks to its rules. I'm not overly pleased with the way TA has turned out today as it looks like a stone that has been thrown up in the air. If this is going to hold, I guess a retest of 8500 has to do the biz. If that fails, we still have the channel to rely on. My concern is that the rise found no support....
 

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ChartMan

Legendary member
5,580 46
Good day trading the 100 MA.... a straight run up through the 5's to 925 and back down to 905. Although the latter part of the day shows strong positive divergence, I'm concerned that the price didn't move very much off 905. This is where we have to get support if the move up is to continue.
 

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ChartMan

Legendary member
5,580 46
ND top to set the scene for a good exit, the third top seeing a drip off in volume peak. The downtrend was signalled by the crossover on the 100 MA with two bounces off it around 920/922. That produced an expanding triangle leading to the violent drop back to 905. This saw a huge increase in volume on the down ticks, clearly seen in the volume chart. A triangle has developed after hours and if we are to move up, we have to break to the upside....
 

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ChartMan

Legendary member
5,580 46
A steady recovery back to a new mid channel up trend is about all that can be said. 8500 looks safe for the moment and support moves up 100 to 8600 with resistance at 8700. The price action has formed a triangle so watch for the break and get ready to jump on, whichever way it goes.... Just be aware that some of these triangle breakouts start off with a false break in the opposite direction to the final move so my advice is don't pile in heavy on the start of the move. Confirmation usually comes with a bounce off the 100MA.....be it up , or down.
 

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ChartMan

Legendary member
5,580 46
Advanced/leading indicators? Do they exist? Most would say not. As a point of fact, they don't - that's for sure. But with a bit of simple support/resistance analysis one can be ahead of the game. Is that always true? Probably not. But you should be aware of the possibilities and be able to recognise these patterns just as you can recognise Head and shoulders, Double bottoms etc. These are usually price related, i.e. you see the "shape" in the price. However, you should always be on the lookout for these "shapes" in RSI and CCI, or whatever are your favourite indicators.... Take today's ES.... and the labelled RS Switch. I have shown these a lot and with good reason. When they work well, they work WELL. They can definitely give you an advanced warning of an impending movement. Using price trendline breaks is one way of entering and exiting trades.... finding the RS switch trend line break can pay dividends as today. The switch ocurred at 909 during a period of tight consolidation. Looking carefully you will see the RSI line broke out , had a little pullback to the trend line and then took off. OK, so it was only 3 points,but it could have been 23... the thing that killed any moves today was the lack of overall volume,2K/min being a rare occurance.
Conversely, using the RS switch would have got you out at the bottom from the previous drop.
 

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ChartMan

Legendary member
5,580 46
True to form :) A breakout preceded by a false break. A move on up to 8770, but not before a big drop to 8600 support and straight back up again.We are now sitting mid-channel and looking good for some more up.The upper channel resistance line is sitting right on my target of 8900. Luck, a wing and a prayer will see us there at Friday's close....
 

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ChartMan

Legendary member
5,580 46
Another nice RS switch to call a bottom, as well as some divergence. Bit drastic on the FED news. One would have thought by now that no one would take much notice. Clearly not, with the major moves of +10,-20,+20. Still, it goes to show, again, that if you have the misfortune to be in the wrong direction on news, one can often recover, if your bottle and pocket can stand the fear.Better not to be in at all, and sit back and laugh it off. Never think of what you didn't win! Think of what misery you have just saved yourself from...... At the end of the day, the apparent bad news made not one hoot of difference to where the index was going. The post drop bull triangle delivered the target of 925 and a bit and we should find support at 920.
 

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ChartMan

Legendary member
5,580 46
Two charts on volume tonight....... First, the calm before the storm. Most in the chat room decided to give up earlier in the day. No wonder as the volumes were a statement of what people were thinking.....stay out until later....Apart from soon after the open, volumes totally dried up, barely making 1000/min, averaging around 500.Clearly no one wanted to play. The triangle break could have gone either way.....On the next tick ( not shown) volume rocketed to over 9000... Guessing the wrong way would have cost you dearly. On SB's, you would have been lucky to get out at less than 920 from 913. With direct accounts, you could have got out at 915 IF you were quick. As I said on the DOW thread, better to be out when the news comes out.If you're not in , you can't lose!
 

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ChartMan

Legendary member
5,580 46
Part two.... As if you needed reminding, volume moves price. For this part of the session, the average volume runs at around 4000/min. A very precarious situation to try and trade with extreme volatility.
 

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ChartMan

Legendary member
5,580 46
I knew I was pushing my luck really :) .... not even up a tiny bit from yesterday, instead a drop straight through bottom channel support and down we went. How come I missed the divergence? It's not as if it wasn't clear.... Barring a miracle, the 8900 target is now out of the window for a while. 8600 gone and just 8500 to go before the big drop.
 

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ChartMan

Legendary member
5,580 46
A quick blip up to catch a few, and then down to where it wanted to go- 8500 support. We now have continued positive divergence and I would hope that this will take effect early next week. It'll be a tough call guessing where we will be next Friday..... On second thoughts, it'a tough call every week :)
 

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ChartMan

Legendary member
5,580 46
Can we learn something from today? Take a look at the H&S formation and the numbers involved. Peak at 910, shoulders at 905. Remember ES moves on the 5's? If the H&S was going to fail, there would have had to have been a breakout above 905 on the right hand shoulder. Secondly, it was right on the 100MA giving double stregth to the failure and a great short entry.Absolutely no need to exit until 892/895. Being brave/greedy would have netted you one more point by waiting to see if 895 was breached. Barely worth the anxiety.
The rest of the day looked like hard going, even though the underlying form was channeling between support and resistance.
The underlying PD should take effect soon....
 

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