Aug 022010

This morning’s market action continued it’s strong move up after the ISM manufacturing and construction spending reports.  Our 15.25 / 17.75 area held price on it’s initial news driven move into the level.  The ES rotated in the level but unfortunately the second push up in the level was still in the news volatility.  I really expected price to test it’s top again (which did not happen until the next 3rd push up).  The next level was 18.75 / 20.50.  Here the second push up created potential trapped traders which created a short opportunity.  The market liquidity started drying up, so it took a long time for this trade to unfold; so long in fact that the probability of it going in the trade direction turned into a coin flip.  On the second rotation down after trade entry, 23K sellers could not push price down far enough to take out the trapped buyer stops (what was left of them after 30+ minutes).  The inability to push price down screamed it was time to get out of this trade.

The next level up 27.50 / 28.50 should be a good area for a short opportunity if price goes the high.

 Posted by at 12:18 pm

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