What will /ES Do Next?: Volume Profile (by TradeFlight.com)

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First, we express our gratitude to all the heroes that made unimaginable sacrifices for us and our country, and to defenders of liberty and freedom.

Now, those who follow our blog know that we do not like to make forecasts
on the future price direction of the instruments we trade.  Huh?  How
can any trader generate revenue without forecasting price direction?

To clarify, obviously, we do make forecasts each day when we trade. 
But, we don't remain stuck on a long term view.  In other words, we truly
confess we have no idea what /ES will do in the next 30 days.  We are
quite content observing Tim and others make their startlingly bold and
accurate predictions!

However, what we do know is that /ES follows supply and demand
areas.  When /ES breaks through a level, and then retests to prove it's
legit, the odds are good it will migrate to the next support or
resistance level.  Then, we try to trade a bounce that can turn into something bigger.  To that end, we find volume profile analysis useful
in our trades.

Here's our latest snapshot.  If you were /ES, what would you do?


ESVolDist

We see two possibilities, 50/50 odds from our perspective, but a nice
move either way.  The best part is that /ES will tell us what it wants
to do through its price behavior on smaller, intraday chart timeframes.

On Friday, the relentless bulls took /ES right to a 50% retracement
at 1105s, just below the prior resistance at the 1110 level.

If /ES can break above 1110s, we see the next potential resistance
level up at 1150s, a nice 40 point move.  Mind you, if it breaks 1110s,
it's not an automatic entry for us – we'll probably wait for a
retracement, watch /ES starting trending North, and then buy a pullback.

On the other hand, if /ES can break below prior support at 1075s,
then it's possible we can see a Southbound run all the way to targets
down at 1004s/1005s.  Again, we would wait for a pullback after breaking
below 1075s and then sell if /ES starts to develop Southerly
tendencies.

Of course, it's Summer and always possible that /ES will just remain
stuck right here between 1060s and 1110s.  Therefore, proper risk
management and scaling out techniques that book partial profits are
essential.

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