ES #F 080406

The market tested the 1284.00 low overnite. Once the 08:30 report came out, the market powered up to 1297.75.

The 6000V chart showed 5 waves down into 1284.00, followed by a .786 retrace and bearish butterfly pattern, that led to the test of 1284.00 low on globex overnite trading. The 120min chart showed strength, so it wasn't totally unexpected that we powered up over +10 pts once the report came out. But now we are seriously overbought with all indicators in overbought territory. What was unexpected was the action pre-market to higher highs. What does this 10 pt gap to the upside leave for regular trading once the floor opens? Only the market knows for sure.

Once again, identifying a congestion wave means that I need to be aware of the next leg up, and thus a breakout move. The trick is to find the end point for where the next wave ends. This is where looking at the momentum on a daily and 120min chart will help me to gauge potential upside targets for exits or profit taking.

I am finding that the SAG pattern can be a profitable scalping pattern on a smaller timeframe, and a good entry for a swing off a larger timeframe chart, if I can find it in time and enter into the trade at the "ends" of the range.

I am testing a new entry strategy: IF very bullish, THEN buy at/near the OP (open pivot); IF very bearish, THEN sell the OP.