May 252010

Volatility has returned.  The ES was fast and whippy this morning.  The first trade area was the 1041.50 rejection area.  It appeared a perfect mouse trap was setting up.  Hopefully everyone headed the advice to wait for the second push into the level and did not enter early because the bottom fell out and price blasted downward.

The ES then headed up to the 1047.75/1048.5 resistance area.  A big lots trade setup with the second push into the area.  It was a fast trade and I did not get an entry.  RG was able to grab a few ticks on that setup.

Thus I had to wait around for the next setup.  Price paid no attention to the 49.75/51.25 resistance levels and blasted right through turning on the tiny 1053.25 acceptance level.  Over the next 20-25 minutes, that 1053.25 pre-market acceptance area developed into the rejection edge of the morning’s volume profile.

This area produced a Big Lots setup on the 10:25 bar.  This trade took a little heat, but worked out in the end.

As I write this, the market has slowed down considerably.  Several of the key price levels were reached this morning and price seems to want to continue higher.  The ES is still down over 20 points, so there is still a lot of negativity for downward movement and a lot of room for upward movement.

 Posted by at 11:48 am

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