The global markets continued to react the Bernanke’s lack of clarity in his press conference yesterday. Too many uncertainties… If the unemployment rate drops to 7%, then the Fed will start tapering this year and if unemployment continues to fall, then QE could, maybe, might end by mid-2014. But interest rates will remain near 0%… A lot of ifs and the fact that tapering is even mentioned is spooking a lot of traders and investors. Thus the downdraft on US stocks continues and was clear coming into the cash open. I must have posted a half dozen charts this morning showing every pullback was constrained to the down trend. Volatility was high today and my usual 6PF ES chart was ticking off bars every few minutes. This plays havoc on reading order flow volume in the bars (at least it does for me…). The ES bounced off levels all morning long before finally breaking down through the major support in the 1590 area. The first long bounce off the DTG 03.50 level unfolded without good buyer order flow, so I stood aside and missed the 6+ point rotation. The ES rotated back down to the bottom of the DTG 03.50 and a weak order flow long opportunity unfolded on the retest. But, the trend was too strong and the S2=02.25 gave out and the ES quickly tumbled to the DTG 99.50 level where it bounced but didn’t provide an trade opportunity. I knew the S2 area would now become resistance which I posted in chat. Price came back to the S2 area and unfolded for another weak order flow short. But the opportunity was with the strong trend at significant support turned resistance, so it was worth a shot and is today’s example trade.
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