Chart (1) - 5-Minute ES for Feb 3, 2009 -- AM A - UpThrust.

Market opens at the high of yesterday afternoon (must know your background) on very high volume and closes down well under yesterday afternoon highs - bearish. !e"t bar is down and market begins to fall. An aggressive trade is to short on the UT. # - Market falls but volume recedes. $n # and the bar before # closes are in the middle indicating buying coming in. !ote the lack of progress on the lows from the bar before # and #. !e"t bar is up. % - Market rallies and volume comes in on % indicating buying. & - As price comes back to the low at # a lack of supply emerges. ' - #ottom (eversal and bullish. !ote a higher low (from the yesterday afternoon low) is put in. ) - Market rallies to ) where volume suddenly increases at the supply area from yesterday afternoon and today*s open. + - As the market reacts from the supply it does so on receding volume. + is a ,idden Test and a location for a long. , - -olume increases at the +lobe" high close is in the middle indicating likely supply. . - !o &emand. / - -olume increases on this down bar after potential supply into a resistance area. This indicates supply coming into the market. 0 - !o &emand. +ood location for a short. !e"t bar is down. 1 - !o &emand. The market is clearly struggling to stay above support (blue line). Another good location for a short. !e"t bar is down. M - Another !o &emand as the market attempts to rally (lackluster) ! - -olume swells and progress to the downside shortens.

Chart (2) Re: Pure SA 2 - 3rice dips down below the support at ! then closes back above the low of !. Most important is the volume. !ote how volume has substantially receeded. This is Testing for supply below ! and finding none. +ood location for an agressive short. 4 - A small #ottom (eversal sends the market up. !ote that a higher low has been put in. 5 - A higher high but volume falls off here so we can e"pect a reaction. !e"t bar is down. 6 - !o 7upply. !ote the higher lows (green line). 8 - This and the bar that follows is pushing through the supply formed between ! and the +lobe" high - very bullish. 9 - !ote the high volume on this bar and the ne"t bar closing in the middle. ,ad this been butting up against resistance (like it did earlier this AM at ,) it would indicate siupply entering the market. Althought there is supply in this volume (there has to be) the market has :ust pushed up above last night*s highs. ;e now have a 7ign of 7trength not a 7ign of ;eakness. < - !o &emand but there is no weakness in the background only strength. = - A minor 7hake $ut into support. !ote that the volume did not e"pand substantially. > - Another new high though price is closing in the middle. !ote the volume. .t has not e"panded here. 7upply is not evident.

2? - The bar before 2? is on low low volume (no supply). #ar 2? is a ,idden test closing on its highs and a location for a long. 22 - As we rally higher bar 22 gives us a large increase in volume with a narrowing spread. More selling is occuring on this bar. !ote the close of the following bar - caution.

Re: Chart 3 Pure SA )eb 6th #ackground is always the first thing we look at in -7A. The 9?-minute chart is often a good time frame for the market phases and overall background. %oming into today there was converging resistence from a congestion area (red line) several days ago and the 7upply 1ine (blue line) of the uptrend channel. #oth converged in the =8? area. About an hour before the open it looked like price might not even get to the =8? area as there was a reaction off yesterday*s high. A - An upThrust at yesterday*s highs ne"t bar was down and a reaction occurred. 3rice held it*s gains however and began to rally 2? minutes after the open. # - ;ide spread up bar on strong volume close on its highs. 3rice pushed up and through the resistance area of yesterday*s highs. % - !o 7upply back to resistance-now-support. The 5-minute chart had a !o &emand in this area.

& - very high volume enters as the market nears the =8? resistance area. 7pread is wide and the close is off the highs near the middle - caution. ' - More high volume and a close in the middle - supply. ) - Again we see an increase in volume close in the middle. !ote the lack of progress made from ' to ). !e"t bar is down - selling. + - !o &emand , - !o &emand . - !o &emand / - !o &emand 0 - ,idden UpThrust M - 4-#ar UpThrust@Top (eversal 3lenty of opportunity to get short. ! - 7elling %lima" The supply that came in at resistance had similar principles as occured on )eb 5rd. %areful study of these two charts will serve you well in the future to know what to look for as price approaches resistance and then what to look for once it starts falling.

Re: Chart ! - " SA# o$u%e S&rea' Ana$()i) Part ** /ust posting a chart that relates to the chart in the pure -7A thread. This is what . call an ApositionA trade. The bias was for an upside trade (long) because the -;A3 and the 3-3 were :ust about eBual. The AhardA open for the 'uro is ?4?? '7T. ;hat we are looking for is a way to get long with the e"pectation that price will move back up to the -;A3. 7ee the market statistics thread for reasons why. AC %limatic Action stopping volume. ;ide 7pread down bar on Ultra ,igh -olume closing near the middle of its range with the ne"t bar up. At the time this is the highest volume bar that can be seen. As we have had the AhardA open it is e"pected for volume to pick up but this is level speaks to something more. This is a transfer of ownership type of bar. The ##s are net buyers into herd selling. #C &own bar with volume less than the previous two bars within the range of a high volume bar. This is no supply. The range is not as narrow as we would want to see and the bar makes a higher high. ;e would rather see the bar trade lower than the previous bar. %C ;ide 7pread down bar on Ultra ,igh -olume with the ne"t bar up. This bar is being support at a ,U3 line-yesterday*s low. -olume is higher than our climatic action bar so we must pay attention to it. .f there was selling in all that volume than the ne"t bar should not be down. Also note that the range should be larger with respect to the amount of volume. &C 4 #ar reversal pattern. ;e have strength in the background and now we see a two bar pattern of strength. This is occurring in the place we want to see it from a M7 point of view-at 7&-5. This is a good place to go long with a price target all the way up at the -;A3.

Re: Chart 5 - " SA# o$u%e S&rea' Ana$()i) Part ** 1ive right edge (A0A put yourself out there to be labeled a fool 1$1)C ,ere is a chart of the 'uro 5 min. #efore we get to the right edge we have to look at how we got there. This is looking left to trade right. .gnore the black lines (7&s) as they are for 7unday@Monday trading. AC Ultra ,igh -olume up bar closing off its high with the ne"t bar down. ;hen weakness appears it appears on up bars. As oft repeated markets do not like this type of bar as it could contain hidden selling. ;ell if all the volume on this bar was buying then the ne"t bar could not be down. .t is. This sets the stage and the weakness here does not :ust disappear. #C .f A was strength we would see it tested immediately and we would also note an old top to the left. There are not old tops to the left so pushing thru supply is not likely what was going on in bar A. # however is a down bar on volume less than the previous two bars. !o supply. This bar should be ignored there is weakness right in front of it. %C )irst AtrickyA bar. ;e see an up bar on volume less than the previous two bars on a narrow range. .t is !o demand. ,owever it is not completed as the ne"t bar is up and not down. 1ooking closer at the bar note that it makes a lower low then the previous bar and not a higher high. .deally the bar

would make a higher high and not a lower low than the previous bar. 7imply we would like it to be a mis-named buying (&unnigan) bar. Momentum takes prices higher. Momentum is a powerful thing. &C & is a narrow range down bar on volume less than the previous two closing in the middle of its range. This is the Test we were looking for to confirm that A was strength. $r is itD ;ell first off it is not in the correct place. A good test would be in the range of the Ultra ,igh -olume bar. This is not. Two bars later we complete a 4 bar reversal where the second bar is a wide spread bar that closes lower than the low of the test bar at &. This is no result from a test. This is likely %;*s ;(# dark engulfing candle that he talks about. )or our purposes the concept is the same. A wide range bar closing on its lows that closes lower than the low of the test bar. .n fact it closes lower than the lows of the last three bars. T+ would have a 7$; over this bar . am sure. 'C The best place to take a short (but not the only place). ;e see a narrow range (!(<) bar closing up and on its high with volume less than the previous two bars. !ote that this bar does not trade higher than the close of the bar at A. This close at A is +avin*s trigger number signal. Also note that ' is within the range of A unlike the test that could of fooled us. #ar ' is completed on the ne"t bar as the ne"t bar is down an makes a lower low bring many into the market. )C This is a two bar reversal. 7eb Man likes to see wider spreads on this pattern but it is none the less a Two bar reversal. A%oincidentlyA the first bar trades up to but not thru the trigger number level. The second bar closes lower than the previous three bars does not make a higher high and closes :ust off its lows. ;e actually like to see two bar reversals AprovenA with either a test or no demand soon after. +C The very ne"t bar is an up bar on a narrow range (!(<) on volume less than the previous two bars. 7imply it is no demand and proves the two bar reversal pattern. .f you only short on up bars then this was what you were waiting for. 'nter on a breach of this bars low. ,C This is :ust another !o &emand bar as price moves down. Again we note that this bar appears within the range of bar A. Thus in the area where there was once high volume we are seeing little activity (low volume). .f you were not yet short this is yet another entry place. $f course the day@week is ending soon and most traders are already hitting happy hour. $kay that*s our background. ;hen the market opens up we would e"pect to see a possible (+ap) down move. )orgive me but . must add this. Market 7tats tells us that the -;A3d is above the 3-3d so what we would want to see from that perspective is a move down to 7&2 and then a move up at least to 7&4. $r the market could move down to the -;A3d and then bounce up from there. 'ither would be consistent with what -7A is telling us at this time. ;e do have to be careful with what happens with the TA(3 over the weekend. .t could cause the dollar to strengthen which would be consistent with our -7A view or it could be received negatively for the dollar. 7o we are looking for early weakness (prices down).

Re: Chart + - " SA# o$u%e S&rea' Ana$()i) Part ** ,aving issues with ensign so here is a 8 min chart from a different software. The focus of this chart is the same as the prior chart ('uro 5 min.). The set-up here is very nice and worth looking at further. A: !arrow range (!(<) bar closing down on volume less than the previous two bars closing near its highs. This is a test. +reat e"ample of a test as it closes lower and makes lower low. A test is a sign of strength but we must see what happens after. .n other words the test is a AcauseA and we now must look to see AeffectA. ,: 4 #ar reversal pattern. 7ign of weakness after our test. This is a very nice e"ample as the second bar makes a lower low closes near its lows and does not make a higher high. ;e would actually like to see the close of the first bar closer to the high for a te"t book e"ample. .n fact the ne"t 4 bar is more te"t book although it fails to produce. !ote that the second bar closes lower than the close of the test bar. C: ;ide 7pread up bar closing near its lows on high volume with weakness in the back groundC this is an Up Thrust. Again we get a higher high and not a lower low as the spread widens from the

previous bar. 3rices are rapidly marked up only to fall and close near the lows. 3ossible entry for the super aggressive type. -: !ote where we are- we have drifted up into the area of the 4 #ar (eversal. ;ith these reversal patterns we like to see them tested@ or find no demand within the area of said pattern. ;e see a narrow range (!(6) up bar on volume less than the previous two bars. This particular no demand bar makes a higher high but not a lower low which is ideal. ;e can enter short on a break of the low of this bar. E: The market moves down and then drifts back up where we see another narrow range (!(6) up bar on volume less than the previous two bars. !o &emand. Again note that this appears within the range of the 4 bar reversal pattern. The stage is set. ;e have weakness in the background. 7tarting off with !o results from a test (we have the cause but no effect). A 4 bar reversal pattern shows further weakness. /ust for good measure we see an Up Thrust in the correct place showing us even more weakness. )or entry we like to see a !o demand- we get two. /ust to finish off the thought on the 4 bar reversal. Take a look at the second one . .t is immediately followed by a third 4 bar reversal this one a bullish pattern. This countermands the previous pattern. !ow take a look at the bar labeled !o 7upply. This bar is within the range of the third (bullish) reversal pattern. As we move forward we do not see a !o &emand type bar within the area of the second pattern. Thus although the second pattern is the most ideal in look it is the one that fails. .n fact notice that we see tests that fall within the range of this pattern. 7ince this was a bearish pattern we would not want to see test but rather no demand. Test would prove to be bullish and thus nullify the bearish reversal pattern.

Re: Pure SA ,i folks . have selected the 7wiss futures (9sm>) for < May 4??> the trading session from 2<h?? to 2=h?? ( 22 '7T to 24 '7T). .magine for the sake of game play that we have a couple of margin calls on our account and a close buddy throws you a lifeline by giving you say 8??E to trade for an hour and u keep all the profits. )rom this background . have thrown a challenge at -7A to help me analyse the setups occurring on the basis of spread and volume action on this 2 min chart. These are the patterns . see in this 2 hour time period. 2. Uptrust. %onsider weakness in background and that volume is decreasing in ne"t bars showing that professional selling took place on this up bar. 4. Uptrust. This is another uptrust in a weak market. 5. !o &emand. Another high probability pattern for shorting. 6. Uptrust. -olume increase but effort is not matching volume as price close in middle spelling more downside. 8. !o &emand. This is a shades of gray but it has volume has than previous 4 bars and it is good candidate for a short. This barFs high fails at the low of 2 converting that level from support to resistance. 9. #ottom (eversal. -olume dries up compared to previous bar and close is higher too. <. !o &emand. As we are in a rising market its easier to spot the lack of supply. =. 7topping volume. A down bar closing in the middle on average volume. >. !o &emand. #ack to back no demand bars but the lack of follow through on following bars. 2?. Top reversal. This is a two bar top reversal on decreasing volume.

22. 7topping volume. -olume is less than average but its still match the stopping volume pattern. 24. !o &emand. This bar setup match a two bar top reversal. ,owever volume less than 4 previous bars Bualifies this bar as a decent !o demand bar. 25. !o &emand. This is our bread and butter setup for shorting failed tops. 26. Test. This is testing the high volume of 22. . wanted to go a step further and from this setup select the highest probability 8 setups that . could have taken. The highest probability is informed by the fact that our stop would be 5 pip below the low or high of the previous bar and it would be pattern that a professional -7A trader would not skipped. #ars 5 9 < 2? and 24 come across as the highest probability setups on this chart. 3lease let me know which 8 setups on this bar would be your highest probability setups. .f possible post your own 2 min chart from your datafeed so that . can compare which datafeed has more reliable volume for the 7wiss future. . am using ensign with Transact on this chart.

Gou are able to identify lots of the -7A indications. !ice :ob. The ne"t step is to put these together a little more coherently and frame the market. ,ere are some ideas to considerC ,a./0roun' - +0-%in .hart: !ote the area circled in black. .t is at the top of the trend (though we know it is at the top only in hindsight). %ompare this to the area circled in green. They look very similar don*t theyD There are very key differences however. Take a close look at the bars in the green circle area. ;henever price dipped lower it immediately rebounded. .n most cases volume came in on these bars (green arrows). 3rofessional money was buying anytime the market dipped lower. ;e know this from the volume. 1ower prices were being re:ected. The background was very bullish at this point.

!ow look at the black circle area. Although it looks similar to the casual eye it is very different. !ote that wide spread bars are no longer dipping lower closing higher. They stay on the lows and volume comes in. This is supply present. . noted this weakness in the '7 a couple of days ago. 1arger interests were unloading into the buying until the buying was finally e"hausted. Also on the 9?-minute the circled area is a distribution area and represents a AcauseA of selling in that area the AeffectA of which is likely to be lower prices to some degreee. That degree can be estimated via 7@( levels and a point H figure chart. ;e are seeing that cause unfold now. 7o the overall background is down. #ut there will of course be rallies intraday but short-lived Abear trapsA designed to attract buyers. Taking long positions with this background in mind are best kept to limited ob:ectives. 15-%in .hart: Gou identified some stopping volume at 2 on your chart. The very ne"t bar was a Test and the bar after that was unable to fall lower so the odds were good for a rally. 5-%inute .hart: The stopping volume on the 28-minute chart was climactic on the 8-min at 2 with a 7pring following at 4. 7o we are looking at a rally of some degree. 3rice drifted up in a small uptrend with higher bottoms and then tested (T) before going up. At I the market rallies above the climactic bar at 2 an indication demand is in control. .n the green circle area note that each time the market dips lower it closes back on its highs -- this is the same behavior we saw in the green circle area on the 9?-minute chart. The market is always repeating itself it is :ust that the intensities always vary. !ote also that price is holding it*s gains on top of the last congestion area (resistence then turns to support now). 7o we are bullish. 3rice rallies through the green circle congestion at ( and then hits some supply at A. ;e know it is supply because of the volume and rather poor close. The very ne"t bar (J5) is a Test falling lower than the low at A and closing on it*s highs on light volume. This test respects the new support level and indicates that the supply seen on A isn*t significant. . like these indications for entry. !e"t bar is up. #ars 6 H 8 are up on good spread but the high volume and poor close show supply. This is the highest volume since the rally began and indicates a portential clima" at this point and danger to the bulls. #ar 9 is !o &emand further adding to the weakness now emerging. #ut the bar following 9 dips lower and has a good close and the ne"t bar < is a Test so we can anticipate higher prices which follow. At 7 we again see heavy volume and a poor close then a large spread down bar with sustained volume closing on its lows. This is a 4-#ar UT and completes the weakness we began to see about a half hour earlier. Although aggressive . like short entries on UTs and 4-#ar UTs. 0eeping in mind that the overall background is still bearish (9?-min chart) longs should not overstay their positions and we can anticipate more follow-through to the downside tomorrow. ,ope this is helpful

Re: Pure SA .t has been a while K a nice long long summer of good trading and other nice rela"ed funL. A K 1ook at that volume K very heavy but the close is off the lows. # K ,idden Test on volume less than the previous two bars. % K Up bar braking though resistance on wide spread and increased volume K no doubt K itMs bullishN & K After holding gains nicely atop of old resistance now support a 4-#ar #ottom (eversal at &emand 1ine rallies the market upward. 'H) K Although ' moves up on heavy volume ) closes below the middle K possible selling and possible weakness. !e"t bar is up on light volume K possible !o &emand and still uncertain. + K !e"t bars are up on good spread and good volume. &emand is still in control. , K After a sideways move price returns to the &emand 1ine on a light volume down bar K !o 7upply. !e"t bar is up. . K Test

/ K wide spread up bar on good volume closing on its highs K bullish. 0 K ,eavy volume close in the middle potential supply. 1 K ,idden Test M K Test and rally into the close. ,ave to love -7AN ,ope this is helpful 'iger

Re: Pure SA . have been out of action on -7A metholody and would like to pick up the pieces. here is my interpretation of the -7A setups on the 'mini 7Hp. of course newer traders are advised to read the volume spread action on the 8minute against the background of the 28 9? charts which gives more clues on resistance and support levels 2. ;e are in uptrend marked by closes in the upper range. the prior bar has high volume but the current bar has decreased volume and price close on the low. this is bearish and a setup for a short sub:ect to following bars closing below the low of this bar. 4. An up bar on reduced or average volume suggests no active buying interest and a sign of no demand. the close below the low of this bar on the following bar is proof of further weakness.

5. 7iminlarly a no demand bar. 6. a %ontraction of bars seen in the spread narrowing always foretells something coming. a close on the low shows further weakness. 8. ,uge volume flowed in on previous bar. .f there is active selling we e"pect follow thru. ,owever this bar shows reduce volume and a close in the middle. #ears altough showing desperation lack power to pull down prices. A sign to get out of shorts. 9. After a contraction of bars for longer period this bar fails to take out the low of the previous bar 4 bars ago. -olume interested also dries up. This is a test of the lows at no 8. <. +reat volume is needed to push above the highs at the left side. %autious conservative traders would wait for a test to get a safe entry which comes 4 bars after this. Trendline traders would be happy to :ump the soup train here as clearly a downward trendline is broken. =. The uptrend is in doubled with a close on the low on volume higher than average. >. a successful to see if there are sellers lurking somewhere. The bears fail to come and price can resume its upward trek. 2?. ;eakness comes in on up bars. this is a no demand bar. 22. a little contraction is always helpful to learn which way price is going. here a close on the low open floodgates to the south. 24. a 7hakeout a bullish sign of a trend reversal or uptrend resuming.