Friday, 27 November 2009

Surprise, surprise

Yesterday and today are examples of how unpredictable the markets are. I laugh when on TV I see the host ask a so called expert what the Dow will be 12 months from now. I don't think that any of them could predict the Dow price 12 days from now, perhaps even 12 hours from now.

One thing I have learned in my trading life is that you can analyse and analyse all you want and one large order can make the market do the opposite of what you thought. I like short term day trading when I can read the order flow so if I see large enough selling coming in I know that at least the next 2 points is down and if others get onto the move I am likely to get one or two more scales out.

I have had a couple of questions mainly centered around Market Profile. As I said in a post, I try and envisage where the market can go as I mark up the support and resistance areas. This "vision" does not give a bias but gives me an idea of the possibilities. Kiki has found this to be one of the hardest concepts to put into practice.  She still asks for help with this almost every trading day.  As she is so smart, I guess it's a matter of practice, day after day.  I can give you one tip: If you see part of a profile that looks incomplete or with what I call a cave, pay attention to that if the market goes in that direction.

My comment yesterday about being "protected" by the Profile lead to a specific question asked by "be the ball". I have posted two charts of the ES for yesterday. One is a 24 Hour period with the profile split into the RTH session and the other is the RTH. The heavy dark pink lines are support and resistance.

If you look at the 24 Hour chart you can see that after the RTH market on 24 Nov closed, we had a new distribution develop. The VAH of the 24th was resistance. During the night the market broke resistance and it became support. So on the 25th by the time we started trading in the morning London time, we had the support of the 24th VAH and could look to the higher heavy pink line as the possible range.

The second chart, just the regular RTH trading gives a similar picture.

As trading developed, the distribution became the 1106 to 1110 area, very tight. If the day had unfolded just a little differently then the game could have been trading the developing VAH to VAL from the long side.

Click to enlarge

Today's trades were again in the Dow Euro 50 (ET) again as we were uncertain of what the volume would be in the ES.

Click to enlarge


  1. Thanks for the added detail and charts, much appreciated!

  2. The two X2's on Trade 6 got me confused for a bit, but then the state of confusion comes easy for me. I guess that was a test to see if anyone is studying your chart. :-)

    Volume wasn't too shabby in the ES for a holiday, half-day session, market moving steadily upward after the buying tail way below value.

  3. Glad someone's paying attention.

    Yes, there is a lot of volume coming from Asia and Europe as the economic power shifts away from the U.S. I think I will have a good post about that next week.

  4. You mention that you use traditional indicators such as stochastic, RSI, etc. (what is the etc?) for cyclical and momentum information. Would you kindly talk (show) about that some if you could?

    What was the first few things you worked with Kiki on, structure, setups, practicing trigger, ect?

    Always appreciated,


  5. Rino, I worked on structure, setups, trigger, practicing with Kiki in that order.

  6. Please if I good understant you will not publish exact setups both CCI lines , periods and setups other studies in this blog ????