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S&P 500 E-mini Futures
Long

ES - Volatility Contraction Pattern

By SPYvsGME
Updated
Expanding on the Volatility Contraction Pattern trade into XMAS.
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1. Strong Underlying Demand
  • Elevated Relative Volume compared to prior days’ average
  • A premarket gap or explosive move off the open
  • The potential for a breakout on higher time frames
  • Underlying significant support (20D-50D moving average)
  • Inability to breakdown


2.Recent Overbought / Supply Pressure
  • Higher lows
  • Extreme price contraction on low volume


3.Diminishing Suppy Characteristics
  • Begin to see the wave tightening
  • Consolidation into 20D,50D Moving Average


4.Decreasing Volatility
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5. Explosive Breakout (TBD)

!!!Not Trading Advice. Just a Bag Holder!!!
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Looking back at the past quad witching. it looks most like June 18th this year.
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DEC 20. 2019. Gap down in morning. early AM rally.
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Loaded up. Now we just have to hold the 50D.
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could still see a flush into the end of the day. Hedging my long position with shorter dated OTM puts.
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following up on the end of day flush idea. You can see in DEC 2018s correction ended shortly after the quad witching that year. It to had a pump from 10am to 11am then flushed the rest of the day into the following week before the bounce.
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Beyond Technical AnalysischristmasrallyTrend AnalysisVCPvcppattern
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