Enjoy a re-run of today’s E-Mini session exhibiting participation as measured by our Zero indicator. On the left side is the hourly panel and the Zero Lite runs on the right via the 5-min panel. Swing traders and scalpers are encouraged to watch the 5-min panel for early clues – in particular price/signal divergences and lack of participation as expressed by a flat signal. If you like what you see then may want to watch some earlier ones – you will find plenty of examples of what to look out for and how to avoid common traps when trading the E-Mini. Plus you may enjoy the tunes 😉
I didn’t add any comments today in order to assure a neutral perspective for everyone. But if you care here is my POV: At the very beginning it looked like we may bounce but that fell apart when the ZL fell back below the mark. From then on all we’re getting is one attempt near VWAP. After that it’s lower highs and lower lows. I think personally I was over thinking it a little in the morning – expected a stronger possibility of a bounce. Which goes to show – you never really are completely free of bias. In hindsight it’s all crystal of course 😉
For me it usually boils down to this:
- Is the Zero above or below the mark?
- Is price in line with the Zero?
- How strong is participation?
- What happens at inflection points (e.g. previous price levels/extremes or VWAP)?
- Is the signal gaining strength as price trends?
- Last but not least are there divergences?
At that first push higher there was still an opportunity to run the tape higher and to fill the gap.. The most crucial moment was the VWAP test thereafter – it all fell apart from there and the Zero continued to point down.
In order to approach this more systemic we need some type of classification that judges the first two hours of the session and looks for recognizable patterns. If we agree that today’s session is a good example then this would represent an example of ‘increasing selling pressure after initial failure to rally’.
Any constructive thoughts would be appreciated. Perhaps we can all collaborate and produce a rule based system that leverages the Zero.
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