11/5/2019 ES Daily Recap
Going into today's sessions we can see a failure to break higher at the initial resistance at the open as buyers showed no initiative. This could be observed on the AD/Line and the NYSE TICK, as from the start we began to downtrend showing this. I personally avoided taking a long position as we sold off into initial support since it is a very aggressive area and since we had a failure at the highs and trapped longs, there was a decent chance of strong downward momentum.
The market did squeeze higher on positive news as manufacturing index beat the estimates. On normal circumstances (too close to ATH) I would have faded news watching either Time and Sales for a stall or price action for a quick fade short (Hit and run trade). I generally do not recommend this for everyone as you have to think very quick and decisively. (Can easily go against you if your not careful, its one of my more riskier types of plays).
After the news squeeze up, the market slammed back down straight through initial support and I got filled at my order in the lower support level and was watching market internals to monitor for continuation. TICK failed to gain any positive values and told me that the short term selling was not finished, so I made it a scalp and locked in a small profit on a portion and got out breakeven on the rest of my order. (I will move my stop up with discretion if the data does not look favorable). Any limit orders that were not hit were cancelled since we bounced and I would not want to be involved the second time if we test as it would make it lower odds trade.
After the bounce we came down a second time for a test and I determined that I would attempt a long at the next support level at low 3060's as it coincides with Friday's POC. I would have only taken it if it was a quick flush down 8-10 points without any bounce for me to validate an entry. The reason for this is because if it slowly grinds down or bounces a bit, it limits the amount of potential action buyer initiative could produce at support.
There was not really much action later in the day as it was a very tight range and we can observe that the profile built up value in this area. When TPO's get wider, there is a less likely chance of breaking out of the range in the current session. There is no fixed number of TPO's that makes this conditional but simply the wider it gets the less likely chance of this occurring.