weekend charting and chat - 09 may 2014, page-3

The wave charts regularly find high probability, low risk trades.
Last night on the ES (S&P500 Futures), an hour or so after open, price was falling and a potential 'Effort Vs Reward' failure showed up.

As price came off, and the supply mounted up, a point was reached where it became obvious that some short term accumulation was more than likely taking place.

Comparing the previous pivot low's to the current one, the amount of supply was quite a bit greater,
but price was not able to break that earlier low's (and it even formed a little spring).
Effort, seen as volume, failed to move price far enough lower that would represent a reasonable Reward for that Effort of 155k contracts.

At this point there was a high probability that as the price fell, traders had been slowly absorbing the supply coming in, which stopped it falling as far as it reasonably should have, in readiness for 'mark up' in price.
It could be judged there was a short term 'Bullish - Effort Vs Reward Failure' present on the chart.

A low risk long entry could be taken here, with a fairly tight stop, just below the previous lows.

Then with price on the springboard and the potential E/R Failure present, price began to push higher, with a little wiggle (absorption) at the previous pivot high
(while traders who had continued to hold as price fell, got out for breakeven)
This wiggle also gave an opportunity to move the stop up a little to the new lows.

Then it continued higher with a even stronger push higher, past the next highs to the left,
however, after that widespread up bar, spreads narrowed considerably and the bars began to close off their highs, which signaled the time to tighten the stops right up,
as a pullback of some sort was possible (but not guaranteed).

The move was ~11pts.

The chart is constructed from 5min closing bars, with a 1pt wave overlay-ed over it.

The set up could also be seen on a longer timeframe.

From 15min closing bars, 2pt wave.

There was also a similar short term set up on Copper overnight.

cheers