This probably should be one of the day trading “rules of thumb” but for whatever reason hasn’t made it in: A trend move isn’t over until we see Exhaustion Volume during the full liquidity of the day. Exhaustion Volume during the overnight session isn’t usually enough to end a trend move – we need to see this Exhaustion Volume during the day session, so we get the maximum potential traders (and volume) involved.
After last night’s waterfall decline – triggered by Chinese market weakness – we had a reaction rally at the open. But the downtrend wasn’t over until we saw Exhaustion selling volume during the day session – of course triggered by some fundamental news, like the FOMC minutes, that everyone could “blame”.
Are we done on the downside? 1,970 in the Emini is the key Support. If that goes, we’re “off to the races” again and we’ll trigger some severe selling volume on equities and a continuation of the Japanese Yen rally (carry trade unwind). Let’s watch it and see.
Good luck with your Emini trading.