Monday, June 3, 2013

ES TRADE REVIEW 06-03-2013

ES opened up at 1633.  Right into the WHITE ZONE OF 1632-1634. When we open in the WHITE ZONE it is always a challenge.  The way I handle it is to look at the prior days close.  If we closed lower prior session and we gap up into-but not above the WHITE ZONE.  I look to short the WHITE ZONE.  Had we opened above the WHITE ZONE. I would have assumed buyers are in control  and looked to get long the first touch into the WHITE ZONE.  This is not a mechanical system,  the location simply gives you an edge in placing a trade.  The middle of the WHITE ZONE provided excellent trade location & Responsive Sellers were able to push ES down to Initial Support. This, once again, easily garnered 2+ points per contract. Up to 5.5 points were available.  

When ES trades into Initial Support I expect Responsive Buyers to respond the first time & that's exactly what happened.  A long trade placed at the middle to the back of the 1628.50 to 1626.50 easily reached a 2 point target & potentially 5+ points.  Responsive sellers quickly responded and pushed back down to Initial Support again.    Responsive Buyers stepped back in once again from the back of Initial Support and  were able to push all the way up to the back of the 1632-1634 WHITE ZONE & a little above.  When I see quick moves through the WHITE ZONE it is a sign of indecision on behalf of market participants and a sign for me to back off entering new trades.  I commented on twitter that the easy money had been made.  That caution was well placed as sellers came back in and pushed back down to Initial Support.  If this sounds confusing, try trading it.  Sometimes its best just to watch.   The third time into a zone can be challenging and even though there was a rotation back up it was sloppy.  After 20 min of indecision sellers were finally able to break Initial Support & push down into Strong  Support Zone of 11619-1621.  

Strong support is just that and responsive buyers stepped in and it was the low of the day.  The push back to Initial Support occurred over lunch and was a chop fest.  Lunch is an incredibly difficult time to find consistency and this bis is all about consistency.   I want no part of chop.  After working on it for about two hours ES finally worked its way back above Initial Support & into the WHITE ZONE going into the last hour.   I warned going into the last hour the if buyers could push above and close a five minute bar above the 1632-1634 zone buyers would be in control & we would have the setting for a short squeeze.  I warn almost daily; contra trades in the final hour are dangerous.  No better example than today and Friday.  Its the trades that you don't take that can be real life savers.  

As discussed, we did experience the short squeeze and buyers pushed all the way to 1638.50 resistance point.   The trade plan pretty much nailed the highs and lows for the day.  More importantly,  focusing on shorts below the WHITE ZONE & longs above really paid dividends today. Hope everyone did well.  Look forward to doing it again tomorrow.  

Success is the result of perfection, hard work, learning from failure, loyalty, and persistence.
Colin Powell 

Notice: This Blog & its contents are intended to be for educational purposes only & not to be construed as trading recommendations  in any way.  You should not follow anyone blindly.  Trading Futures & Options on Futures involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions are subject to change at any time.

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