Daytrading Rangebound Days in the ES

[JT47319]

OK, as expected, the economic #s made any kind of range-bound support and resistance strategies difficult and rather risky.

Multiple value areas and POCs formed temporary support lines much like fib confluences. For a while, it looked like the market was still trying to form a range between Monday's upper and Tuesday's lower range, but it eventually sliced through multiple support lines.

What is especially ominious is how Monday's LVA was penetrated. Remember, Monday was when the surprise NY Empire # came out. The Philly Fed # was flat and did not live up to the overblown Empire #.

If breadth continues to be negative, I would expect a further continuation of the downtrend. We now have multiple areas of resistance to short from.

Today was a perfect example why its risky to hold through numbers. And why I should follow my own advice/discipline.

 

[Vienna]

Quote from JT47319:

OK, as expected, the economic #s made any kind of range-bound support and resistance strategies difficult and rather risky.


Obvious problem is, you don't know if it will be range bound or not...so a lot of this seems like hindsight.

 

[JT47319]

Of course not, just like one does not know if a breakout/down will occur. But I do believe that market's condition tends to typically be in a consolidation/congestion/ranging mode with the occasional breakout. I believe the oft-quoted statistic is that the market spends 70% of its time range-bound punctuated by an occasional trend. #s, news, and Greenie always change the market in someway.

 

[JT47319]

Several people have requested resources on learning more about this method. The following makes good reading, especially the first two.

Complete Market Profile™ Handbook, in Adobe Acrobat
http://www.cbot.com/cbot/docs/handbook.pdf

Audio presentation with powerpoint slides
http://www.zapfutures.com/archives/daltarch.htm

"Official" CBOT page on Market Profile
http://www.cbot.com/cbot/www/page/0,1398,13+287,00.html

A little FAQ
http://www.cqg.com/support/marketprofile.cfm

Some newsletters that use some variation of Market Profile:
The Likos Letter, also has a voice chat room
http://www.thelikosletter.com/current/dtusa.cfm
Daytradersaction:
http://www.daytradersaction.com/
And Enthios, has some practical MP trading strategies:
http://www.enthios.com/morningcall.htm

The 80% Rule (ie "Value Fill")
http://www.cbot.com/cbot/dow/cont_detail/0,2614,3+10771,00.html

Market Profile basics by a firm that provides MP s/w & research
http://www.cisco-futures.com/marketprofile_basic.html

 

[JT47319]

This is a different little graphic.

Friday formed two distinct ranges. It brokedown following the news of a potential Kenyan bombing and formed a value range below 996.25.

 

[JT47319]

Here's another good Market Profile website:

http://www.nqoos.com/marketprofilecurrent.htm

His example:

 

[zounds]

As a trader of 30 years, I applaud you. We can make it as complicated as we want, but there is much to be made of playing the swings until the real money moves. Good for you. The one thing I would add, having managed real money, is that sometimes the real money is real wrong. Be nimble. Especially in thin markets.