ES (energy perspective) coming into the weekend
Posted: Fri Aug 28, 2015 7:49 pm
Hi All,
I've been (slowly) working towards 2.23, and had a few minutes to check the ES from an energy perspective. One of the bugs that got fixed was the ability to do full 24-hour plots in energy without missing data or getting weird volume resets. So if your energy charts don't look this nice yet, don't worry, they will as soon as 2.23 shows up.
Anyway, I probably don't need to mention it to anyone here, but it's been an *interesting* week, to say the least. The whole point of the energy charts was to let us take away some of the white noise in regular price charts and see what is happening under the surface. Here's the last five days, on a 24-hour chart:
The top chart is just a standard OHLC bar chart. The bottom chart is energy. The bottom chart has been in a very clear downward trend for the last few weeks, and I've sketched the swings on there in red and blue. Red is lower highs, lower lows (down), and blue is higher highs, higher lows (up). In the most basic sense, markets will either move up, or they'll move down, and just watching how those highs/lows form will tell you which of the two possibilities you're in. From an energy perspective, the actual low of the crash happened the morning of Aug 26 (Wednesday), when those lines turned blue. You can see that this is a little later than what the actual price chart showed. The upward swing in energy lasted until yesterday towards the day-session close, at which point we resumed a downward trend, taking us into the big pink triangle.
On the regular chart I've marked off highs at A, B, C, D, and E. In the regular chart, point E (yesterday) took out all the other highs, showing all kinds of strength. On the energy chart, point E has taken out point D, but has not taken out A, B, or C, showing much less strength. The weekend is coming up, and everyone seems to be hedging their bets as far as which way this thing is going to go, which is why you see it moving sideways into a triangle. I also notice that the media is saying all sorts of things like "we're out of the correction! yay!", etc. I don't find the news particularly useful in trading, unless I read it backwards or upside-down. So if they're cheering the Dow saying we're done, that's actually not a bullish signal in my opinion, at least as far as news indications go, which is not very far.
Anyway, what does all this mean? In strong, clean moves, the energy chart will lead the price chart. But we have a case here where it's price that is leading to the upside, and energy dragging along. It doesn't necessarily mean we're going to crash again, but it does mean that the market is much weaker than it appears. Energy has also consolidated, and is going to break out of that triangle one way or the other. Again, doesn't mean we're going to crash, but I'd be really surprised if we don't see some big moves. The stage is set for some volatility. Should be good trading if you're on fast time frames. Just be cautious, and if you're a beginner trader or have a small account, take the size of the waves into consideration when you're putting on your trades. You can make a ton in markets like this, but you can also lose a ton, and it all can happen really fast.
Regards,
Earik
I've been (slowly) working towards 2.23, and had a few minutes to check the ES from an energy perspective. One of the bugs that got fixed was the ability to do full 24-hour plots in energy without missing data or getting weird volume resets. So if your energy charts don't look this nice yet, don't worry, they will as soon as 2.23 shows up.
Anyway, I probably don't need to mention it to anyone here, but it's been an *interesting* week, to say the least. The whole point of the energy charts was to let us take away some of the white noise in regular price charts and see what is happening under the surface. Here's the last five days, on a 24-hour chart:
The top chart is just a standard OHLC bar chart. The bottom chart is energy. The bottom chart has been in a very clear downward trend for the last few weeks, and I've sketched the swings on there in red and blue. Red is lower highs, lower lows (down), and blue is higher highs, higher lows (up). In the most basic sense, markets will either move up, or they'll move down, and just watching how those highs/lows form will tell you which of the two possibilities you're in. From an energy perspective, the actual low of the crash happened the morning of Aug 26 (Wednesday), when those lines turned blue. You can see that this is a little later than what the actual price chart showed. The upward swing in energy lasted until yesterday towards the day-session close, at which point we resumed a downward trend, taking us into the big pink triangle.
On the regular chart I've marked off highs at A, B, C, D, and E. In the regular chart, point E (yesterday) took out all the other highs, showing all kinds of strength. On the energy chart, point E has taken out point D, but has not taken out A, B, or C, showing much less strength. The weekend is coming up, and everyone seems to be hedging their bets as far as which way this thing is going to go, which is why you see it moving sideways into a triangle. I also notice that the media is saying all sorts of things like "we're out of the correction! yay!", etc. I don't find the news particularly useful in trading, unless I read it backwards or upside-down. So if they're cheering the Dow saying we're done, that's actually not a bullish signal in my opinion, at least as far as news indications go, which is not very far.
Anyway, what does all this mean? In strong, clean moves, the energy chart will lead the price chart. But we have a case here where it's price that is leading to the upside, and energy dragging along. It doesn't necessarily mean we're going to crash again, but it does mean that the market is much weaker than it appears. Energy has also consolidated, and is going to break out of that triangle one way or the other. Again, doesn't mean we're going to crash, but I'd be really surprised if we don't see some big moves. The stage is set for some volatility. Should be good trading if you're on fast time frames. Just be cautious, and if you're a beginner trader or have a small account, take the size of the waves into consideration when you're putting on your trades. You can make a ton in markets like this, but you can also lose a ton, and it all can happen really fast.
Regards,
Earik