Sometimes writing this Emini trading blog can be extremely stressful. For some reason, I feel an obligation to try and provide a market forecast. It would be easier to re-cap my winning trades and maybe once in a while show what I learnt from my losing trades.
But there is something within the human psyche that drives people to show off. Try to predict the future. Prove how smart they are. And that’s where the trouble starts.
This last week was one of my worst week’s trading in a long time. During the last two or three months my trading has been very consistent – nice gains almost every day. But this last week I blew it. I traded badly on the two range days of the week – Monday and Thursday. So this weekend I’m feeling "gun shy". Very unsure about market direction.
And funnily enough, I think that is what the market is feeling right now too. Friday was a low volume Doji Candlestick day – a classic sign of indecision.
Doji Candlestick patterns can go either way. They can either be:
- A reversal signal showing, in this case, the end of a pull-back in a down trend, or
- A continuation pattern showing the mid-way point of a new up trend move
Doji Candlestick Pattern (Emini daily)
The Emini chart above shows the "Red, White and Blue" reversal pattern that developed from Monday to Thursday and then Friday’s Doji Candlestick pattern on low volume.
The "Red, White and Blue" reversal pattern has a Volume Exhaustion down bar followed by a High Volume Churn bar then a High Volume up bar to signal the start of a new up trend. This is usually a very reliable pattern. But Friday didn’t show any follow through and no buying volume to push past the 920 Resistance level.
No Demand Volume Pattern (Emini daily)
Friday also ended up being a "No Demand" volume pattern day too. The third in a row that have led to Monday sell-offs.
Volume Perspective on 920 Resistance Level (Emini 27 min)
And when we drop down to a smaller time frame chart, you can see the volume perspective and the importance of the 920 Resistance level. We’ve had:
- Declining buying volume as the 920 level was reached, follow by
- High volume churn showing Professional profit taking, then
- Very weak buying volume into the 3rd push, culmininating in
- High volume down bar that could be the start of a down trend
The 920 level will be key for Monday’s trade. If we test it again and fail to break it then the down trend is on. However, if we break through on high volume or continue to consolidate in a tight range below it then the up trend is likely.
I’m going to put my head down next week. Trade smaller, exit losing trades early and take my setups. Good luck with your Emini trading.