My Short bias got rewarded this week – but my nerve got severly tested leading up to the 4 July weekend! Since then the Emini has dropped 50 points.
As the Emini dropped through 880 today, we had large volume coming into the market and the Better Volume indicator started signaling High Volume Churn in a number of timeframes. This indicates profit taking by the Professionals and new buyers entering the market. We're also at a significant support level, around 874.
My best guess is that we might get a bounce here. The TRIN Indicator is also confirming a possilbe turning point with a Bullish Divergence signal.
Bullish Divergence on TRIN Indicator (Emini daily)
The TRIN Indicator signals Bullish Divergence when price makes a lower low but the adjusted TRIN indicator reading makes a higher low. The Bullish Divergence signals are marked with Red dots and the Bearish Divergence signals are marked with White dots.
When these signals appear when the TRIN Oscillator is over-sold or over-bought, it gives an early warning signal that the short term trend might be changing. The chart above shows the last 2 bearish and last 2 bullish divergence signals. Sometimes they're right on the mark, sometimes they're a little early.
Time for me to take profits on my Short trade. Good luck with your Emini trading.
