In this week’s newsletter, I’d like to do a recap on what we did last week on the ES. In particular, this week’s article is about swing trading the ES.
If we look at the weekly chart, as you remember, I highlighted last week that the pivot high at 2110.25, was absolutely fundamental to any continuation of an uptrend on the S&P.
Well, you can see that it was hit during the week. It wasn’t penetrated, and the market declined off it. And, if you look at where I’ve circled the volume off the bottom of the chart, you can see that we have typical no demand volume and a recycling of volume at the top of the uptrend.
And, that is indicated by the declining green volume going into the move, followed by white no demand, red selling, green, a bit of buying, and then, at the end of this week, no demand. So, we can see that continuous chop going on in volume, so you know that you are at a potential turning point or a trend pause.
Now, I want to show you the eighty minute chart, and I want to highlight swing trading on the ES. Notice the symbol I have up here, it’s the @ES.D., which is just the day’s contract. Although the S&P is open on Globex 24 hours, I like to see just what is happening on the American session. And, I like to see the gaps that come in, because gaps get filled. So, I like to see the ES.D contract on all of my swing trading that I do.
Now, if we look at where I have placed the red arrow, you can see that the decline that came off the weekly resistance that I have just shown you in the above chart, you can see that we have had the downtrend. The downtrend has come in, and now we have entered into a congestion area, and we have a congestion high zone of where the arrow is for the price to break out. And if we also look at the volume underneath, you can see again that we have rotation volume, choppy volume at the bottom of the downtrend, no demand coming in. So, this coming week again, is an important week to see what the resumption of the S&P will be.
What Volume Shows
If we move over and have a look at the 40 minute, that is also confirming that we are in our congestion zone, and you can see I have placed a red arrow where that congestion high is.
But this time, look, we have green volume. So, the bias is showing us that on the 40 minute, buying was coming in, but it wasn’t sufficient to push the market up. Now, this could be accumulation volume. So, although we are in congestion off the volume, the bias is to an uptrend coming in next week. And if we look at the main market time I trade, which is the 20 minutes, you can see, we do have our congestion, running along the bottom.
Now, it’s something I’m very pleased about the Hawkeye Trend. It shows you the congestion with the white dots, just going sideways all the way through that area. And you can see on the last arrow on the right, again you can see the congestion zones being setup off the Hawkeye pivot and the pivot extensions.
You should all have these pivot extensions in the package, if you want to see white line off to the right, just go in and format the indicator and type true, and you will see the pivot extension. If you look at the volume, the volume is not quite so good on the 20 minute.
But, you can see that it is declining volume, low volume, and then, a test on higher volume right one bar before the end, and then, green volume coming in. Remember that it is a market rule that markets do not continue downtrend on low volume. This again is showing me that there is accumulation volume coming in.
But, with the profile of the market going sideways, it’s hard to call at the moment. We will see at the beginning of the week whether it will take out the high of the pivot or the low of the pivot. But in the meantime, the trend is certainly in congestion with the bias to the downside on our trend indicators. However, the volume is showing us pure congestion and pure accumulation and no demand going on down here. So, a very interesting week coming up. Now, the first arrow on the 20 minute chart, right at the top, I placed above the two and the one . . .
Now, put the Hawkeye ADDs on your chart. ADDS shows you exactly when to add to your position. So, you can see how much you would’ve leveraged out of this downtrend. Understand the volumes and what they are showing you. We’re up into seeing a very interesting week. Certainly, the newsletter last week highlighted to you the resistance point on the weekly chart that it would struggle there. Which it did do.
And we did have the downtrend on the intraday chart and the daily charts. And we are now at a critical point coming up this week. Now this coming week is also Easter week, and it will be a very quiet trading week later on. Probably from midday Wednesday, it will be very light volume. So, be very careful and don’t get tricked into any substantial positions over the Easter.
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[The red lines and arrows are for illustration only and do not form part of the software]