ES 1066.00!

Jan 30th, 2010

From our 1145.00 high target the market has fallen 79.00 points or $3,950.00 dollars trading a 1 lot! Not a bad move but what is our outlook now?

On this leg down we have had a lower target of 1066.00, we have had this target for the last week. Friday after hours the ES hit 1066.50 so we are 2 ticks off of the target being reached which in our book that is close enough to call it hit. So what does this mean?

This means that we are now thinking the markets will trade sideways to up over the next couple of days then start a up move to the 1110.00 area. Could we be wrong? YES we could be as the market is falling right now but knowing the high odds reversal zone in advance can help us in multiple ways. Here are 2 good things to keep in mind.

1. To not get too aggressive short at these level.

2. Know that the markets could be choppy on Monday and Tuesday and to be quick about our trading.

We are not saying we are buying this low as that would be counter trend to this leg. But what we are saying is to be careful shorting this level with allot of contracts on the line. We are in a area that we could bounce hard so be careful with the shorts.

Saying all of this we have to keep a few things in mind. We do not want to go long with heavy contracts unless we at least take out a swing high on the 30 min chart. Notice how this down move we were making lower highs and lower lows making it a downtrend. That is easy to see and is very important you stick with the symetry of the market until it actually changes and that would be taking out a new swing high and we have not even made a swing high yet.

The point is if the 60 min chart is near or at the lower target know that it takes time for the 30,10 and 3 min to actually change to the up direction so the next few days could be choppy if we actually are putting in a short term low.

We could bounce up to 1080.00 then come back down to 1075.00 then go up to 1090.00 then come back down meaning the markets are probably going to be choppy while the smaller time frames are going to try to change the symetry of the 60 min. These are the days that most traders lose money as they hold for a big move that never pans out.

We have had great sell signals on the 10 min all the way down to this point from the 1145.00 high target. We are now being careful with shorts as just about the time it feels right to go short the market will squeeze everyone out of their shorts and start going up.

Happy Trading,
http://www.eminischool.com/