The Breakout and Approaching First Target
Today’s session was fairly simple and straight forward with
great risk vs. reward setups. Recall our plan going into this week from the
weekend report: as long as the bull train remains above 2050, the immediate
targets are 2089.5, 2100 and 2107.
When the day session opened it quickly became clear that it
was a 5minute 8EMA re-entry bull train as we had noted in the morning. At lunch
time, it hit a high of 2076 and then spiked to high of 2079 just before the 2PM
FOMC announcement. Then, it quickly rolled over and went as low as the 2055.5.
This is when reiterated that as long as ES doesn’t go under 2050, it is merely
just another BTFD for day trades. Subsequently, bulls proceeded with the V
shape reversal off the 2055.5 low which was also the daily 200SMA support. Before
the day session ended it had reached a high of 2085.25.
Overall, the bull train dip buyers got another opportunity
just like yesterday to buy in the 2055-2060 zone with hard stop at 2050 for the
immediate target at 2089.50. As traders, what we can control is the risk vs.
reward and that is exactly why today’s session was so simple and straight
forward.
What’s next?
There’s 2 sessions
left for the monthly candle closing.
Daily closed at 2081.50, this is the 5th
consecutive close above the daily 200SMA. Also, it closed as a breakout bull
bar from yesterday’s price sandwich setup.
We do not consider the 2089.50 target to be fulfilled, as
previously we stated that our margin of error is 2 points for ES.
As long as the bull
train remains above 2050, the immediate targets are 2089.5, 2100 and 2107.
(At this point, any retrace should not exceed 2055 because
of today’s bull breakout candlestick, it is your first hint of trend change if
it does)
For bears: Break below 2050, then the immediate targets
are 2042, 2030 and 2020.
The Daily Extreme
Overbought Signal
It has now made a new high vs. the historic peaks, this is
pretty much unprecedented. As mentioned previously, price is king and the signals
are just setup potentials. ES needs to trigger below 2050 for this to be
confirmed. Having such a euphoric high could provide a fast and furious breakdown when the bears pounce onto the
battlefield.
Roadmap and thoughts:
Price has now closed above the 78.6% fibonacci retracement level.
Currently, this leads us to believe that the 100% full retracement at 2134 becomes
very likely and will eventually be fulfilled. The key issue with this is that
we cannot predict if it does this within 20 sessions, or get a dip back to 2030
first then go for 2134, or it ultimately fails. This is just a very general
roadmap/thought to be kept in the back of our minds.
The first try at Daily 20EMA is a BTFD setup
Even if bears manage to reverse next week or within these two weeks;
daily bulls have a first try BTFD setup at daily 20EMA setup just like how
first try hourly 20EMA was a BTFD setup during Friday’s day session. We count
this rally from the 1861 vs 1861.5 hourly bottom to 2065 as Leg 1. The bounce
has never had to retest the daily 20EMA yet, but retested the daily 8EMA 3
times and bounced off it. This means it has been a massive bull squeeze run
that the very first dip to 20EMA should sticksave. However, just because first
try BTFD at daily 20EMA is a great setup ,it does not mean it has to be a daily
chart scale bounce (50-100 points). It could just be an intraday 20-30 points
bounce then retest the daily 20EMA again if bears manage to have that much
conviction.
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Our Swing Position
- Added 10% Dec Monthly ITM Puts
We will not add anymore swing shorts until ES
triggers below 2050.00
To reiterate: we are not great swing traders; this is a long learning process. Our swing account represents only 20% of
total trading dollars and the day trading account represents the other 80%. For
example, if the day trading account is 800K USD, swing account is 200K USD.
