ES #F 080906 Trade Analysis

The market gapped up and made a high at 1286.75 before pulling back. Looking for gap fill as possible for this morning, as the higher timeframe charts are getting toppy and weak. The gap fill at 1277.75 would make a .618 retracement of the move up from the 1272.00 low to the 1286.75 high of this morning. We had a nice CCI sell pattern from the 1286.75 for the sell short entry, and a ZLR for a JOT entry at the OP on a bounce. Market is bullish still, but that could be slowly eroded away today if the high at 1286.75 holds and we slowly make our way down.

Update at 10:10 EST: market found short term support off the 34ema 8min chart for now. Let's see if it will hold, as the 15min and 30min both show signs of weakness. Since we have weakness and backend resistance at 1283.75 for the time being, I am looking for a sell signal. ZLR with reverse divergence against backend resistance for a short sell JOT entry. A high risk entry because it is "in the middle" vs "the ends" of the range.

Update at 10:36 EST: successful JOT ss entry. Now we have a possible 5 wave pattern into .382 fib at 1281.25. Charts still look bearish, but stand ready for retracement before continuation down to fill gap. Since the entry was in the "middle" of the range, I would have to either scalp that trade, or hold a wider stop.

Update 10:51 EST: As expected, the market retraced after making 5 waves down into 1280.75. That made for a high probability trade scalp long if one were so inclined. Since we made 5 waves down, I will look for a good sell pattern after the market retraces the move down from 1286.75.
Let's see if the market can retrace to the .618 fib level at 1284.50, which also happens to be the OP for today. IF the market reaches the OP, THEN I will look for a sell pattern and JOT entry ss. Charts are showing mixed signals. However, the higher timeframe charts are getting toppy. IF we get weakness in the smaller timeframes, THEN that will make the higher timeframe charts more bearish. On the other hand, IF we show strength firming up on the smaller timeframes, that makes the higher timeframe charts more bullish, and hence a higher probability of breakout topside to higher highs.

Update at 11:12 EST: Market hit a .707 fib level, just past the OP of 1284.50. JOT sell entry with limited risk (1pt) . Not the best setup for a JOT trade entry, as we have mixed signals, but just working on probability for a pullback. Let's see if we can scalp this for 4 ticks. 120min chart shows potential upside. Tight stop on this short.

IF we are in fact in a wave 4 range, THEN the market can still power up to 1290.25 to 1294.75 and test of 1297.75 before falling back. I need to keep this in mind. Price action is bullish for the time being.

Update at 11:31 EST: Stopped out of the short for a 1 point loss.

Another Short entry here with test of top. Stopped out on short.

Momentum to the upside now. 1.27 fib target is 1288.25 and also a .618 fib level... so potential PRZ (potential reversal zone).

Update at 12:07 EST: OP is potential support here. May retrace here to test the high at 1288.25 The 8min is somewhat bearish for now. Odds are that the high is in for today. Can we close the gap today? Gap is 1277.75 and 1.414 fib level is at the same level. Higher timeframe charts show weakness now. IF we get further weakening of the shorter timeframes, THEN the higher timeframe charts will trigger their sell patterns. However, IF we have support here off the OP, THEN there is still chance for market to surge higher.

Update at 12:39 EST: Looking for a break of OP for further downside. Downside target for now is 1277.75.

Update at 12:50 EST: OP broken for successful short trade. Let's see if market finds support at the morning low of 1280.75 before further downside. Downside targets are: 1277.75, 1276.75, 1275.50, 1274.00, test of 1272.00 low.

Update at 13:35 EST: Higher timeframe charts continue to show bearishness. Short term support here at 1278.00, which is a .618 retracement of the move up from 1272.00 low. Watching for possible retracement before continuation lower.

Update at 14:00 EST: Higher timeframe charts remain bearish. Expect lower is possible. 8min chart looks like it wants to bounce.

Update at 14:12 EST: Mixed signals on charts. Higher timeframes have no buy signal as of yet.

Update at 15:03 EST: Downside targets met. Let's see if the 1272.00 will hold, and for how long. Daily chart has turned bearish and break of 1272.00 is likely. Questions is, will it happen today?
Market remains bearish. We are gathering momentum to the downside. 8min chart indicates that we are trending. No buy pattern in sight.

Update at 3:55 EST: Daily chart sell pattern triggered. We are currently trading below the 200 sma and closing below the 34ema. Pullback from 1297.75 has now overbalanced. Looking for further downside for the remainder of the week.