Profit taking today. The Emini closed up 5.25 points at 1,389.00 on Tuesday. But watch out – there was profit taking by Professionals going on. Do you know what pattern to look for?
Today’s action is typical of Professional profit taking. Range was below average at 9.75 points and volume was above average at 1.2 million contracts traded. The profit taking pattern I look for has:
- A new high
- Volume greater than yesterday’s volume
- Range less than yesterday’s range
- Close off the highs
The chart above shows occurrences of this pattern, labeled “Stop”. If you use TradeStation then the EasyLanguage code is:
V > V and Range < Range and H > H
You can download the latest version of the Stopping Volume code here.
The intermediate trend started by yesterday’s strong advance appears to still be intact and today was just profit-taking mid-trend. However, if we break below 1,370, this could represent a change in trend and today’s action was part of forming a double top.