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Friday’s session was fairly simple as the
overnight session consolidated in a tighter range and we noted in the
Thursday’s night report that price contraction is generally followed by price
expansion which means a fast and furious breakout/breakdown. For the entire
week, the setup was a massive feedback loop consisting of higher lows and the
major resistance of 1907.5. A sustain break above that level would setup the
squeeze and buyers chase the bull train
During the day
session open, there was a 5min bull engulf setup forming that we noted two
minutes before the open. This paved the way for the hourly candle to become an 8EMA
bull train acceleration setup as the bulls had a straight continuation pattern
to 1900. Then, it hit the major resistance of 1907.5 and broke above the week’s
high 1910 quickly. The rest is history as it was just a simple breakout and go
pattern that grinded the 5m 20EMA/15m 8EMA train up for rest of the day. By the
end of the day, it fulfilled the smaller 100% measure move at 1930 target.
Daily closed at 1931.25 as a large bull bar above the daily
20EMA. Major resistances are located at 1940, 1947-1950 and 1960. The battle
between the daily bullish reversal pattern from the Jan 20 temporary bottom vs.
the established weekly bear train should be an interesting phenomenal this
Chart Perspective and Context
Recall, the market has been a trading range of 300-334
points for the past 3 years between 1800 and 2134 as we noted in a few of our
weekend reports. Now, the market is trying to go back to the half way point
which is located at 1967. This means that the overall context is a 3 year
trading range vs. the established weekly bear train setup. The weekly bears are
looking for a lower high/rejection at 8EMA to keep this train momentum alive.
The immediate target of the smaller measure move at 1930
from Friday has been fulfilled. The other measure at 1950 remains valid as long
as 1HR 20EMA keeps trending.
The Hourly Extreme
Currently, the signal is looking for a confirmation at
around 1940-1950 for the potential quick dip of 20-30 points. Unfortunately, we
won’t be here on Sunday night to confirm this in real-time as we have other
obligations to tend to.
In short, weekly bears looking for a rejection this week to
keep the bear train alive and daily bulls looking to continue their short-term
assault to the immediate target of 1950. It should be an exciting week for us
as we approach this market level by level with high probability setups.
P.S. I wonder if “everyone” is still long-term (3months to
12months) bearish after last week’s action :)
Today’s session was just a classic inside day;
the first two hours of the day session already defined the range high vs. range
low with the hourly candle wicks that aligned with the levels from yesterday. Remember,
this entire week the market has basically been trading inside the daily shake
zone levels of 1907.25 vs.1851.25 from the Tuesday KISS report levels. The
market has consolidated and the hourly triangle range is getting tighter for
the imminent breakout/breakdown. Overall, it was a pretty simple session as day
traders had defined risk vs. reward scalps based on the levels we had provided
Daily closed at 1882 and it was a doji candle within yesterday’s
range. Price contraction is generally followed by price expansion which means a
fast and furious breakout/breakdown should be arriving very soon. Make no mistake;
the market can continue this consolidation as long as it likes until the key
levels such as 1907.5 or 1851.25 breaks decisively.
There are still no immediate targets or high probability
projections as the market continue this shakefest. Our educated guess/bias
remains the same, it favours short-term bulls as the chart pattern and
structure of this temporary basing pattern suggests the daily 20EMA target to
Levels for breakout:
break above 1900 with immediate follow through to 1907.50 opens up the
immediate target to 1915 (daily 20EMA) and 1927.
Levels for breakdown:
break below 1865 with immediate follow through to 1851 opens ups the
immediate targets to 1837, 1820 and 1805.
Tomorrow is the weekly and monthly candle closing so it
could be a wild ride as both sides duke it out. Last week’s candle was a bull
hammer that was a sticksave from the multi-year major support and so far the
bulls have failed to do a straight continuation to the upside. With the current
failure from the bulls to do a straight continuation rally, it favours the accelerated
weekly bear train in the coming weeks as long as major resistances such as 1920
and 1940 do not get decisively taken out. Again, we’re looking forward to
next couple weeks as the market gets out of this shake zone so we get some easy
trending moves riding the train.
Today’s session was similar to any other Fed
day where price gets tested at both the range high and range low. During the
overnight session, the bulls defended the upper support and did not even let the
bears retrace back to the 1875-1869 area as we thought it would before the
blast off. When we woke up and saw the overnight price action, it gave us more
confidence the market is going to hit ES hit daily 20EMA target today.
During the day session opening hour, the bears
tried to retest the overnight low and attempt a breakdown but quickly failed as
the bulls managed a nice 5m bull engulf candle. We entered longs at 1886 with an initial
target of 1894 and the bull train quickly took off as we had a target extension
to 1920 which was a roughly 5 points under the daily 20EMA at the time. We
trimmed and trailed while riding this accelerated 5m 8EMA bull train up. However,
the bulls couldn’t sustain the 1907.5 breakout and got rejected at 1910 and
turned back to 1900 really quickly. Remember, the 1907.5 level is the Jan 19,
2016 high that we discussed last night and bulls needed to power through that
in order to get to the daily 20EMA.
Fast forward to the 2PM FOMC announcement, we
had a micro double top rejection that bears needed follow through below 1885
for the flush setup vs. bulls needed to reclaim 1895 in order for them to have
a chance for the daily 20EMA target. Once the 1885 support broke and bears
continued their assault below the overnight low of 1878.75, it opened up the
immediate targets of 1869, 1858 and 1852.
Daily closed at 1878 and the market is still
inside the shakefest zone of 1907.5 vs. 1851.25. The daily context is still a
temporary basing pattern with major resistance at 1907.5 and the 20EMA that’s
The weekly bear train is waiting for the shorts
re-entry at 1920-1940 or when the market breaks below 1851.25 with immediate
follow through below 1836.25 to indicate that the swing bears are back in full
force. You have to remember that the Jan 20 was just a temporary bottom as we
discussed before and the higher timeframe context is still bearish. Until major
resistances such as 1940 and 1950 get decisively taken out, this is still swing
bears’ fight to lose.
monthly candle closes in 2 days as well; swing bears may want the bulls to sticksave
back to 1920-1940 and close there. The reason is because a large monthly large
bottom wick candle is generally unsustainable so in February/March the bears
may get the chance to retest the prior supports based on the lower highs
There are currently no immediate targets or high probability
projections. However, our best educated guess/bias favours
short-term bulls as they try to retest the resistances and breakout based on
the higher lows triangle setup. Our general roadmap is 1880->1920~ (daily
20EMA) ->1870 and it’s subject to change based on the overnight action. Remember,
the market is just fluctuating from range high vs. range low defined by our “shake
zone” levels. We’re looking forward to next couple weeks as the market gets out
of this shake zone so we get some easy trending moves riding the train.
Today’s session was a bit surprising and tough
to trade even though we pretty much nailed the general road map from last
night’s report. The overnight session was just an accelerated 1HR 8EMA bear
train that hit the 1860 and 1850 targets from the extreme overbought “A+ Tier” signal.
Remember, we use two points as our margin of error so we considered the 1851.25
low as fulfillment.
At 4:00AM, the 30min candle was bull engulf
along with the hourly candle being a doji. This provided the bulls with the
sticksave setup of bouncing at least 25 points bounce as anticipated. The bulls fulfilled that criteria but exceeded
expectations because the bounce was V-shaped and did not even need a solid pullback
. At the day session open, we thought it
was going to pullback a little first based on major resistance line ahead before
it blasts off. The bull train did not care and immediately ran our scalp short
stops, then rode the 8EMA train to 1892 and 1899 resistances in a timely manner.
Overall, the regular trading hours were tough for traders if they didn’t buy
within the first 30mins of open since most of the “easy money” occurred during
the afterhours session.
Daily closed at 1888 as it closed a hair above 8EMA. The
daily context is still a temporary basing pattern with the range being 1850 vs.
1904.25. It’s a shakefest between the range high and low but it’s large enough
to make decent dough trading it.
The overnight pullback targets 1875.5-1869.7 area which is
the 50%-61.8% fib retracement area. Assuming this key zone holds, we expect a
breakout tomorrow above 1899.5 with follow through above 1907.5 to get to the
daily 20EMA target based on the current hourly and daily pattern. However, at
this point this setup is *not a high
probability setup compared to what we normally discuss in the KISS reports.
This is due to fact that tomorrow is a FOMC/Fed day and we currently do not
have a clear edge.
The alternative scenario is that 50%-61.8% fib retracement
area does not hold and the market retests the previous night’s low of 1851.25.
If that level breaks decisively, then it immediately opens up 1844, 1837 and
1830 as possible bear extension target
Current Plan For Tomorrow:
Limit position sizes, or stay in cash because it’s usually
just a shakefest before the 2PM announcement. Then, the market does the initial
move, the false move and the trending move to close the day. No edge, no trade.
Today’s session was fairly interesting based on the battle
of the shorter intraday timeframes vs. the longer timeframes such as hourly and
daily. First things first, as some of you already know the Hourly Extreme
Overbought “A+ Tier” signal was confirmed overnight at roughly 1:45AM when I
posted about it this morning at 8:57AM EST. That set the tone for day as long
as prices stayed below 1905 along with the overnight lower high pattern.
When the day session opened, the micro charts were really
shaky because the 5m+15m timeframes had double top vs. double bottom within the
first 35 minutes. This created the shakefest for the morning session and most
traders were probably feeling frustrated with the range. Once the bears broke
below the 1886.50 level they had a clear shot at 1882 to accelerate the bear
train. However, a 15m bull engulf quickly cemented the temporary bottom when
bears couldn’t decisively break below 1882 that got sticksaved by the bulls. Fast
forward, at 2:00-2:30PM everybody and their mother probably saw the clear flush
setup with the consecutive lower highs rejection. Overall, pretty shaky day except
the afternoon breakdown that stemmed from the massive feedback loop setup.
Daily closed at 1871.5 and back below daily 8EMA. The high
was 1904.25 from Sunday night vs. the 1907 major resistance we discussed in the
weekend report. This means that bears are actually stronger than we expected as
they rejected the bulls’ attempt of breaking above major resistance like
The Hourly Extreme
Overbought “A+ Tier” Signal
As mentioned this morning, the targets are 1860 and 1850 and
it invalidates above 1905. ES is trading at 1867.5 as of writing; bears should
not let bulls retake 1877 if this is going towards the initial targets. This
means that we should use 1877 as an ideal trailing stop.
1842-1860 is a major support area for tomorrow and the bulls
have a chance of being sticksaved there if the bears fulfill the extreme signal
targets. Assuming this key zone holds, we expect a temporary bounce back of at
least 25 points based on short-term oversold conditions. Eg. if sticksaves at
1855 then bounce to 1880, if sticksaves at 1845 then bounce to 1870.
The daily roadmap would be back to 1925~ which is the daily
20EMA resistance assuming the major supports hold the next couple days as it’s
setting up for a 1-2-3 trend change pattern here.
The alternative scenarios are that this turns extremely bearish
by breaking below 1836.25 and then we resume the daily 8EMA bear train. Or even
the bears can’t break below 1865 and bulls manage an overnight sticksave back
P.S. Targets from the Extreme signals are not the same as
immediate targets so do not be misled.