CME is another stock that has very similar price characteristics to the previous post on Ansys. CME is of course the ticker for the CME group and once again it has been a question of waiting for a breakout through a price-based resistance area. For this stock, it was the $215 price region clearly visible with the red dashed line of the accumulation and distribution indicator for NinjaTrader. The thickness of the line denotes the strength of the region and is calculated and delivered automatically and more importantly updated as levels are tested and held. Hence we have an instant visual picture of the strong and less strong regions of support and resistance from a price-based perspective. So a question of waiting and being patient, and in this case, the level was duly breached in the second half of October.

Once again it is Thursday’s volatility that catches the eye here but for a different reason. Clearly, the price action closed lower on the day, so the open was a gapped-up move but look at the volume. Would this have been enough to propel the price $10 higher at the start of trading? And the short answer is no. There is also a saying in trading which is that gaps get closed, so it was no surprise to see the price fall back and close with a widespread down candle on average volume. So here it was a trap move of a different kind – a trap to draw traders and investors in on a gapped up open on the expectation of higher prices to follow before reversing. These are all traps set by the market makers for the unwary and all revealed through the prism of volume price analysis.

(Click on image to enlarge)