Tuesday 24 June 2008

Bullish Divergcence on Put Call Ratio Oscillator

The Emini closed down 3.00 points at 1,314.75 today. I almost wasn't going to trade today, expecting low volatility going into tomorrow's FOMC announcement. But the market started heading towards 1,300 in after hours. We ended up with a 23 point range day and high volume.

Although the Emini closed down, the adjusted TRIN reading was +101, showing underlying buying. In addition, both the TRIN and Put Call Ratio Oscillators have turned up - and they are showing bullish divergence patterns. See the chart below.

Emini Put Call Ratio Oscillator Image

Bullish Divergence on TRIN and Put Call Ratio Oscillators (Emini daily)

We had a nice short trade signal around 1,325 with a combination of volume and Hilbert Sine Wave patterns.

Emini Upthrust Image

Volume Upthrust Pattern (Emini 5 minute)

The volume pattern was an upthrust into previous resistance on lower volume. The lower volume shows there is not enough "energy" to break to new highs and follow through. Stops are triggered and a reversal follows.

Emini End of Trend Image

End of Trend Signal (Emini 5 minute)

This volume pattern coincided with an "End of Trend" warning signal on the Hilbert Sine Wave. We also got a signal on the low of the day with a similar pattern: