On occassion (less than three times a day), a sentiment shift devlops in the market very close to the time when our Coarse and Medium Level (ES 5 min and YM 2 minute) tools reach their respective closes. As a result, of this sentiment shift occuring just before the close of the bar, not enough time exists between the shift, and the close of the bar for many traders to 'see' the change signal materialize. It is under these circumstances where one can 'see' the signals using a finer tool set. This is not a recommendation for people to start using finer tools. It is simply an explanation this specific example, and other examples which develop infrequently throughout the trading day. What we have here is the market signaling, "I haven't finished moving from Point Two to Point Three yet - even though I certainly look like I have." Note the YM 11:30 (IBGS [change]) followed by more increasing red on the 11:32 YM Bar (all times Eastern and 'close of bar'). Note how Price is continuing to move in a lateral fashion here (11:24 - 11:30). In other words, The market hasn't finished moving from Point Two to Point Three. In the future, when one runs across these sort of circumstances, ask yourself "Do I have my Point Three already?" If not, Focus in on how the YM continues to move while waiting a few extra seconds to take action. Sometimes the answer arrives a little later than we would prefer. This was one of those times. - Spydertrader
I dunno' what you see (as I cannot 'see' through your eyes), but the chart you posted shows increasing Black followed by more increasing black. While the first increasing black bar appears to close back inside (Formation FBO) which would signal change, if one looks over at the YM (12:04 and 12:06 [close of] bars) because Price sits inside a Lateral, the YM certainly doesn't say go short. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1928457>
Here is a 5 minute ES M8 chart for May 20 2008. I have not posted a 5 minute chart in a while. Bar color had some problems today so I had to remove the study and will work on it later. The daily chart bar color is fine and I will post one this evening.
Now here's something that puzzles me. We have: - pennant breakout on increasing volume - breakout of the lateral formation on increasing volume - more increasing volume on the next bar (15:35) - Breakout of RTL on increasing red volume.... Sure we get change inside the 15:40 bar but don't we have every reason in the world to hold short and to expect a point 3 down? What did I miss? How did others see this period? regards, Ivo <IMG SRC="http://www.elitetrader.com/vb/attachment.php?s=&postid=1928502">