ES Update: Keep It Simple Stupid Series (Daily Bearish Setup)
Today’s session was an exquisite execution by both the bulls and bears.
The overnight market must have heard our margin of error call from last night’s
report as it quickly fulfilled the 2034 immediate target. Fast forward to the
day session, it opened and dropped towards the 1HR 100SMA support line. This
gifted us another opportunity for a quick risk 3 for 10 intraday long at
2019-2020. Then, hourly chart closed with two consecutive bottom tail candles
which had a lower high formation. In the afternoon, when ES broke below
the important 2018 support, it confirmed the 2010-2011 immediate intraday
target. However, the 15minute bulls were quite impressive by creating a V shape
reversal that resulted in a 15m bear flag failure. Masterfully, the hourly
bears still had a glimmer of hope as there was a possibility for the 1HR 20EMA
rejection setup. The rest is history.
What’s next?
Daily closed at 2010.75 as a bearish engulfing shooting star
candlestick. This means that the market went above yesterday’s high and closed
below the past 3 sessions. It creates a decent feedback loop of trapped bulls
from the past 3 sessions heading into tomorrow. Price is currently hovering
just a tad above the daily 8EMA support. We need confirmation of the daily
bearish candlestick setup.
Day trade wise: our current plan is to short every bounce instance to
resistances of 1HR 20EMA/50SMA using the risk 3 for 10 strategy. This is as
long as bulls do not sticksave and go above 2034.25.
What do daily bears need to do to confirm this setup?
Bears must have a daily close below 2002.00 which is the 61.8%
retracement level shown on the chart.
2002.00 also represents the half way point of the Oct 15 perfect bull
bar. By closing below this level, it solidifies bears momentum and acts as an aggressive
confirmation of our roadmap targets.
Unconfirmed Preliminary targets and projections
- Immediate targets are 2002, 1994 and 1990.5 (daily 20EMA)
- Intermediate swing targets are 1982.50 and 1969.9 (daily 50SMA)
Again, we approach the market level by level. We do not have big targets
like the 18xx or 17xx targets. The KISS approach focuses on high probability
immediate and intermediate targets only. This is why the majority of the
targets have been fulfilled since the inception.
If bears
fail to confirm: The 2054 intermediate target becomes immediately active once
again when price
goes over 2034.25. It is a bull train until it proves otherwise.
Our swing position:
- Added 5% more shorts today in Nov OTM strikes.
- Now, it is at 60% total swing short. (55% Dec ITM strikes SPY+QQQ)
- We plan to add another 30% once we get a confirmation.
We are not great swing traders, this is a long learning process: Our swing account
represents only 20% of total trading dollars, the day trading account
represents the other 80%. For example, if the day trading account is 800K USD,
swing account is 200K USD.
