ES S/R Map for 1-4-10

Thinking out "loud" here, please I challenge you add value here by adding your own thoughts.


Couple of notes:
- No one has talked about how the last trading session of the year was .... a trend day ! Historically and statistically, the 1st trading session of the year is bullish, as fund managers deploy new contributions. However, how often does ES end the day, week, month, and year on a rather weak note, and what does that mean for the next trading session, the 1st of the new year? My thoughts as documented in the above chart completely ignore the statistics, 1st day of the week, 1st day of month, and 1st day of year market tendencies, and is a strict reading of the chart. So, I can't wait to find out the real answer come monday.


- famed and highly respected ES Trader Don Miller [url]http://donmillerjournal.blogspot.com/[/url] has often remarked about how his best days come the day after a trend day, as the market tends to oscillate after trending, as it tries to digest what happened the previous session. This makes sense, as I have yet to see ES deliver two trend days in a row - has anyone actually seen this happen?

- If the market does oscillate, that means there will be opportunities on the long and short side.

- Santa Claus Rally started Dec 21, an RTH close below 1100 would negate the santa Claus rally and actually be considered a bull trap.
- an RTH close above 1122 would mean a complete recovery of the Dec 31 selloff, and therefore bullish, meaning a potential re-test of contract highs 1128.5 is in the cards.
- Starting 12/29, I see distribution. Therefore, I am biased towards more weakness on Monday, but I am more than willing to wait for the chart to tell me what it IS doing, and respond accordingly.
- regardless, I am 99% sure that there will be an opening gap on Monday morning to open the session, and I will be looking for a trade based on the opening gap, and 5B Mini-IB strategy.

- What Monday morning does depends somewhat on what the Sunday night overnight session does, so I don't have any additional thoughts until i see what the overnight session is doing. This is why I'd like to hear everyone's thoughts regarding Monday's session.

- kind of off topic, but has anyone seen a study done on which day of the week tends to produce the most opening gaps ?

Originally posted by phileo

...best days come the day after a trend day, as the market tends to oscillate after trending, as it tries to digest what happened the previous session. This makes sense, as I have yet to see ES deliver two trend days in a row - has anyone actually seen this happen?

That's a good question and one that's easily answered by running an analysis against historic market data. However, the big question is how do you mathematically define a trend day so that an algorithm can answer that question for you?

- regardless, I am 99% sure that there will be an opening gap on Monday morning to open the session, and I will be looking for a trade based on the opening gap, and 5B Mini-IB strategy.

Have you read the Fading the Gap study? There is rarely not a gap. Page 3 shows that 93% of the time the gap is 1 point or bigger.

kind of off topic, but has anyone seen a study done on which day of the week tends to produce the most opening gaps ?

Page 2 of that study shows that the gap fill is most likely on a Thursday (82%) and least likely on a Monday (65%).

Hi DayTrading,

Yes, i've read your study on fading gaps, and that's actually led me to record some of my own stats on gaps.
I'm not really sure what my though process was at the time when i asked about which days produced the most opening gaps. Might be my personal opinion that the weekend produces the most consistent imbalance of buyers and sellers to open Monday's session.

U-Turn reversal, cup&handle, hammer candlestick (on a higher timeframe), whatever you want to call it, but the DAX open has created some bullish price action for ES.
Which means my hypothesis could be invalidated.
Which means a potential new opportunity in the making.

1119-1120 is still the line in the sand - confluence of Thurs' 61.8% Fib, prior VPOC, and POC 5d SMA.

How many times have i seen the overnight run-up like this in the past couple of months?

5min. IB breakout would have worked nicely today: 1121 - 1124. It pretty much set the tone for the 1st half hour.
Unfortunately, I did not recognize it in time, should have place bracket orders earlier.

resistance 1125 let's see what happens there

Originally posted by phileo

5min. IB breakout would have worked nicely today: 1121 - 1124. It pretty much set the tone for the 1st half hour.

to put it more accurately, the 5min. IB breakout confirmed the bias of the overnight session.
IMO, one should not underestimate the importance or significance of the overnight session.