Tuesday, 5 April 2011

(UPDATE) Emini S&P 15min wedge

I see a clear consolidation building here in the S&P Eminis. We are possibly finishing off the "e" leg of a triangle which implies a breakout coming into the contract highs in the 40s. Wait for price to thrust out of this support level before getting long. However, like every pattern, we must be prepared for these classic setups to fail as these are often stronger signals. Breaks of 1324/1325 to the downside are bearish and get short. Note that yesterday was an Inside Day on the cash market. Expect a break either way tonight.

Emini S&P June 15mins:

(UPDATE) I thought I would follow up on the outcome of the Emini pattern shown last night. I think this is a great example of failed patterns and how a trader needs to be completely flexbile to be successful.

We saw a breakdown of the low end of the pattern during European trade. There was no follow through to the downside and thus immeadiatly we should be looking to get long if price regains support. Failed patterns are often very strong signals as the crowd has traded on the perceived breakdown, and are then forced to cover their postions adding fuel to the subsequent rally. Personally, I never trade the Eminis BEFORE the Cash market open. This pattern here is a clear illustration of why- there are many false breaks and moves prior to the US opening.

We did see a thrust out of the 1324/1325 support level when the US stepped in and this was the initial signal to get long. Look for a strong 5min or 15min candle. There was an opportunity to add another postion when price broke above the downward trendline. However, there was no strong follow through and price failed right at the previous highs at the 1333/1334 res level. Nimble traders could have made a small profit but all in all this was rather a volatile session.

Emini 15mins:

Emini 5mins: