Today's WHITE ZONE, which determines who has control buyers or sellers was 1554.75-1557. the market opened above and traded directly into 1557. the first few minutes of the market can be very fast and difficult. We did garner a pause and a small rotation from the front of the zone, but it stalled without even 5 ticks of rotation. You had to be very quick to make this trade work. With the selling pressure we experienced overnight, a bit of caution was warranted. The ES quickly traded down through the white zone to 1552. The bounce back into the WHITE ZONE offered excellent trade location, particularly the back of the zone.
The back of the zones offer the highest odds trade location; the most aggressive location is the front of the zone. The test of 1557 was quickly sold and we traded down to the 1549-51 zone where the market paused. There was a good rotation from the back of the zone for up to 3 points but it is very aggressive because we are below the buy/sell zone. Sellers were clearly in charge with no indication of significant reversal. I did tweet that at 1549 I would start to looking at longs with supporting evidence; followed by 1544 and 1539.
Each of those areas provided good rotation, you just had to know from price action when to leave the trade on and when to stick it. 1539 turned out to be close to the low of the day and offered up a 10 point rotation.
I also warned via twitter that I had observed tick divergences and would be cautious on shorts after we hit 1539 and would not consider a short until VWAP or the 1550 area. Both proved to be high odds entries to the short side.
Bottom line, while today looked easy in the rear view mirror you had to be really clear about where you wanted to execute. Trade location made the difference between having a really good day and having a bunch of stops and losses. Context makes a HUGE difference.
The easiest way to use this chart is to look for setups in the direction of the party that has control does it give fewer set ups? Yes. Bad for guys who want alot of action, but great for guys who want to build their equity curve.