ES Wed 8-8-12

I have a low volume area at 91 and that gap in the data at 92.75 so my plan is to be a buyer down here in the 91 area in O/N .

Other key is 87 and then 83 - 84...then I like 78 but the big area support is the 73 - 75 area mentioned in mondays thread

above we have 96 - 98 as a key area from yesterday

I sold 99.25 ....we know the buyers will try to push to 1401 - 1402 if we are on the wrong side

I mentioned this pattern a couple of years ago. It really doesn't come up much and there can be failures, but I like the pattern because it is easy to limit risk.

The guy who described it to me called it a volatility fan.

see the lines on the chart, a higher H is followed by a Lower L, then a new Higher H, then a new Lower L.

once you have at least 5 points (Like 3 new Hs and 2 new Lows) then you just keep watching for price to stall on its journey to the other side of the 'fan.' That usually happens near 50% of the distance between the last two extremes). I find them easy to spot.

After making that H at 1396.25, price started a retrace but stopped going lower at the 1393 handle. if price moves above the (in this case) the previous swing H,1296.25, it is a buy at 1 tick higher (I don't see them that often, but the breakout is usually one way with virtually no stutter or stall. only good for a couple of points.

I realize that the half-hearted retracement stopped at your 92.75 area, Bruce, but for this pattern I know of no pre-requisites of volume spikes.

it will be iteresting to see if all the folks who sold the va high from yesterday add REAL fuel to the buying when they hit into their stops zone ( 2 - 4 points above the va high)or wil it just roll over from up here..

97.75 was va high !

gap in the data at 99.25

added at 1400...

Bruce, i have the va high from yest at 401.75....did u mean the va low ?

first lvn spot is 98.50...volume nearby too !!

yes Nick - it's hard to trade and post so thanks for clarifying...

a great pattern/ observation that can be observed about LVN's and value areas most days .....what happens most days is that they will either stop price dead and have it roll over or it blows right throught it and then price comes back to test it...today both things are happening


today we had both things happen: We had a Lvn at the 1396 - 98 area ( key volume volume spike node from yesterday there too)...price came up and it was resistance the first time today...then price blew through it and we are now testing it from above...what happens is that people have stops plaxced on the far side of an area...like the VA low...once they are stopped out there is no more buyers to drive price higher...so price can only go back down a bit..


so today they blow past that VA low, all those players get their stops hit above ( because we are taught to sell a va test from below so the amateurs have stops to buy back at a loss above) and no new buying comes in once those stops are cleared out...without buyers we can't keep going up...so we came back down to frustrate those VA low players


trying to hold runners for further downside now that gap in data and first LVN area has been hit...this is a hard hold as lots of volume came in at this area..regardless of the logic posted above


the same concepts happen at the air pockets....we'll use LVN since that term seems to be in Vogue now...

great explanation Bruce, thanks

taking 2 more off at 97.50.....only one contract left and no clue right now...some volume coming in here

glad u appreciate it Nick...I think there may be only about 3 of us left on the forum this summer...

cool Brent..nice to know folks still come around here