ES review & plan

Activity on the first trading day of the year produced nearly 30 points of range and 1.3m emini contracts traded. NYSE composite volume was light though at 2.7bn shares. The TICK was +/- 1000 on several occasions, with no real bias and the A/D ratio was marginally positive despite the acceptance below last Wednesday's low and looking a very negative day. 

30 min ETH


1. There is no sign of excess at the all time high at 2088.75 therefore showing higher odds that the long term auction up is not over yet. The upside measured move based on the continuous back adjusted monthly charts is 2156.00 being 161.8% of the Oct '07 high to Mar '09 low range.

2. The last few days downwards have been on relatively light volume over the holiday period and have retraced less than half of the rally from the lows after Yellen's 'patience' speech.

3. There is an open breakaway gap below created on the day following Yellen's speech between 2011.00-2026.75. The next composite HVN below is at 2029, 50% of the Dec swing move is at 2025.50 and 2023.50 is a composite LVN to watch for rejection and possible reversal. Acceptance through 2023.50 would increase odds of the gap being filled.

RTH Daily

4. Friday left a prominent POC & VPOC. Longs will need to push through these look to regain last Wednesday's low and force a short covering rally back into Friday's overnight trading range.

5. If pressure continues on the downside short term, Friday's value area low and top of the buying tail are the main defence spots for longs. If support fails to hold we could see a swift move towards the gap zone and confluence of levels.

It's a light start to the week on the economics front. Friday has the main event with the employment report. Uncertainty is increasing in the US about timing and pace of rate rises in the wake of the headline GDP growth and employment numbers,  the continuing strength of the Dollar, low Oil prices and the fact Europe is in for another rough ride this year in many countries with the ECB expected to massively increase it's balance sheet are just a few of the things which are likely to spike volatility this year.