Saturday, January 16, 2010

ES Futures - First Ten Minutes 01/15/10



The market on Friday built a volume bulge in the bottom half of Friday's range, and closed at the day's Point of Control (1132 to 1133 area). This is slightly bullish.



Thursday was a Narrow Range 4 day - most narrow range in the previous 4 days. NR4 and NR7 days have traders looking for a breakout trade.



Friday we did get a breakout to the downside. Many times the first 10 minutes will give a clue to the direction of the breakout. Following NR4 and NR7 days, traders will try to push the market in the direction of a breakout. Notice how the market corrected about 50% of the first 10 to 15 minute range, and then continued in the direction of the initial swing direction of the first 10 minutes.



This doesn't always work. On 1/12/10, the market looked like it wanted to go up. But then we got that quick spike to the downside, and then the market went up. However, the correction was much greater than 50%, and the previous day was not a NR4 or NR7 day. Also, this open was a large gap to the downside, and the momentum was more down than up in the first 20 minutes.



The chart above is 12/31/09, and it followed a NR7 day. We got a 50% correction of the first 15 minutes, and a continuation of the initial swing direction.
Charles


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