ES - Volatility Contraction Pattern

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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!!!
Nota
Looking back at the past quad witching. it looks most like June 18th this year.
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Nota
DEC 20. 2019. Gap down in morning. early AM rally.
syot kilat
Nota
Loaded up. Now we just have to hold the 50D.
Nota
could still see a flush into the end of the day. Hedging my long position with shorter dated OTM puts.
Nota
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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