The Emini closed up 19.00 points at 1,522.75 on Friday. Volume was very heavy at 2.0 million contracts traded – the largest volume since the low of 14 March 2007. On Thursday’s post I said “We need to see the Emini bounce and then test today’s lows before the next upswing starts.” Got the bounce today, should get the test on Monday.
The chart above shows the Emini with 27 minutes bars (exactly 15 bars per day) and John Ehlers Hilbert Sine Wave added. The break into a down trend is noted with a white dot (generated automatically with TradeStation EasyLanguage code) and then the move continues with no oscillator crosses.
Finally, we’re about to get another cross of the Sine Wave oscillator. This is a pattern I call a “Complete” as it finishes the trend move. The same pattern can be seen on 45 minute bars. You can read more about this “Complete” pattern here, here and here.
We decided to go short at the end of Friday having seen this pattern form with Stopping Volume. We got short at 1,523.25 and have placed a 10 point profit target on half the position along with a stop loss order.
After the “Complete” pattern is finished the up trend is likely to continue:
- Composite Trend Oscillator has turned up
- Sine Wave has turned up on 135 minute bars
- Sine Wave is about to turn up on daily bars
- Crude Oil has weakened
- US Dollar versus Japanese Yen has strengthened
- Commitment of Traders report shows professionals are still long
Just a recap on last Friday’s post about TRIN indicator divergence:
The chart above shows Friday’s signal on the Adjusted TRIN indicator (circled) and the corresponding Emini bar is marked (arrow). Any sign of weakness could have been used as an entry point, for example a break of the previous day’s low. Following the signal we had a 40+ point decline in the Emini. These signals don’t happen too frequently, but when they do they are worth following closely.