Monday, November 30, 2015

E-mini S&P 500 Futures: Keep It Simple Stupid Series



Ascending Triangle Ride


Today’s session was a bit frustrating if you had missed the ideal range high short like us in the morning. Before the day session opened, the market tested the 2095 ascending triangle range high resistance at around 8AM. Then, it quickly rolled over below the 15minute 20EMA by the 9:30AM open. The hourly day session bar closed as a massive bear that erased the previous 5 hours of gains. This confirmed our gut feeling for the day being a range day shakefest setup between 2095 and 2081. This was a high probability scenario due to the monthly candle closing along with price just trading inside the ascending triangle.

As the session unravelled, the 1HR 20EMA resistance got rejected three times during the day session and caused almost all our buy scalp trades fail. The bears made a slightly lower low to 2078.50 near the end of the day which was just slightly below the 1HR 200SMA and ascending triangle major support region. It is fitting that the market has bounced 10-15points in the after hours session back to the 2095 range high area. This is a perfect example of a textbook shakefest where it lured in both sides and trapped them through the range and nothing has changed after all that’s said and done.

What’s next?

Daily closed at 2085.25, this is still above the daily 8EMA and inside the ascending triangle combined with hovering at the 78.6% fibonacci retracement level. Consolidation at highs favours bulls since this is a bull train until price proves otherwise. 

Monthly candle has closed with a small bull body and wicks on both ends; this is considered a win since it’s a straight continuation higher high from the massive October bull bar setup.

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Since nothing has changed, here is the copy and paste from the weekend update:
As long as price remains above 2070, the immediate targets are 2100 and 2110.
The intermediate target is the cup and handle 100% measure move that targets 2128.50. (There is also an ascending triangle that targets 2123.50)

For bears: breaking below 2070 would be first hint of bull train exhumation and warning. A follow through breakdown below the week’s low of 2065.50 would confirm a temporary trend change and targets 2059 and 2045 for the extension.

18 Months of Range Bound Market – Approaching the Range High
As briefly discussed in older updates, the market has been in a large monthly range bound market for the past 18 months with the range of 1803.25 to 2134. Based on this context, the daily/weekly bull train is approaching this massive range high resistance area of 2100-2134. This means that the swing bears are going to try and re-short here as long as price remains below 2134.

Weekly Chart Perspective
The past Thanksgiving week, the bulls have held above 50% of the Nov 16’s bull bar. Now, they need to trigger above the Nov 9 week’s high of 2097.75 for the mini squeeze to intermediate targets of 2123 and 2128.50. Remember, the previous weekend update scenarios were straight continuation up/consolidation week first then up next week. This means that this week bulls breakout and go.

Monthly Chart Perspective
In the context of the monthly chart, August 2015 vs October 2014 formed a double bottom – this is the intermediate swing breakout bulls are looking for new ATH. Remember, the October monthly bar was a huge bull engulf that still gives the potential of a breakout the next few subsequent months as long as price stays above October’s half way candle point.





Sunday, November 29, 2015

ES Weekend Update: Keep It Simple Stupid Series

The Monthly Rangebound Market




Last’s week action was fairly straight forward as it was a snoozefest that consisted of a shakefest with the entire week’s range being only 32.75 points. It would have been a 20 point range week if it weren’t for Tuesday retest of the daily 20EMA that was sticksaved by bulls.

The key take away from the week was that bulls still managed to close above the 78.6% fib retracement and the weekly candle closed above 75% of the previous week. Remember, the goal for the weekly bulls was to hold above the half way point and continue higher.

What’s next?
Daily closed at 2090.5, this is above the daily 8EMA, 20EMA supports and the 78.6% fibonacci retracement level.

As long as price remains above 2070, the immediate targets are 2100 and 2110.
The intermediate target is the cup and handle 100% measure move that targets 2128.50. (There is also an ascending triangle that targets 2123.50)

For bears: breaking below 2070 would be first hint of bull train exhumation and warning. A follow through breakdown below the week’s low of 2065.50 would confirm a temporary trend change and targets 2059 and 2045 for the extension.

18 Months of Range Bound Market – Approaching the Range High
As briefly discussed in older updates, the market has been in a large monthly range bound market for the past 18 months with the range of 1803.25 to 2134. Based on this context, the daily/weekly bull train is approaching this massive range high resistance area of 2100-2134. This means that the swing bears are going to try and re-short here as long as price remains below 2134.

Weekly Chart Perspective
This past Thanksgiving week, the bulls have held above 50% of the Nov 16’s bull bar. Now, they need to trigger above the Nov 9 week’s high of 2097.75 for the mini squeeze to intermediate targets of 2123 and 2128.50. Remember, the previous weekend update scenarios were straight continuation up/consolidation week first then up next week. This means that this week bulls breakout and go.

Monthly Chart Perspective
Tomorrow is the monthly candle closing and it is very likely it’s going to close above the 8EMA. October and November have fixed the damage done by the August massive bear breakdown candle.
In the context of the monthly chart, August 2015 vs October 2014 formed a double bottom – this is the intermediate swing breakout bulls are looking for new ATH. Remember, the October monthly bar was a huge bull engulf that still gives the potential of a breakout the next few subsequent months as long as price stays above October’s half way candle point.












Tuesday, November 24, 2015

E-mini S&P 500 Futures: Keep It Simple Stupid Series




The Consolidation Continues


Today’s session was quite intriguing during real-time and in retrospect; the market broke below the bull pennant support during the overnight session with the 3AM large hourly breakdown candle. The bears managed a 1HR 8EMA rejection train until the day session open where the first try at 1HR 20EMA provided a great short entry.

We shorted near the 2078.5 high with an avg of 2076~ for the bear target of 2059-2061 based on overnight lower high shoulder breakdown pattern. Subsequently, during the next hour the market retraced the opening hourly bull bar fully but bears were still unable to break below the overnight low of 2065.50. By 11:30AM, the 30minute bar closed as a huge bull candle that retraced the previous two bear bars. This meant that the retrace was too much and a squeeze was very likely as bears were trapped and thus the feedback loop of shorts covering and buyers chasing began. This also reminded us of a popular phrase that Corey Rosenbloom often says, if something should happen, but does not happen, then it often leads to a bigger-than-expected move in the opposite direction. Once the market triggered above the 2078.50 morning high the squeeze was confirmed and the rest is history.

Quick Self-Reflection

Last night, we had a game plan of trading the possible consolidation phase of this holiday week using the strategy of buying at range low and shorting at range high. We did not follow our predetermined plan and got lured by the market thinking the overnight breakdown would provide the bears follow through. At the end of the day, this week is still a mid to high probability holiday shakefest week that lacks follow through on hourly breakout setups.

What’s next?

Daily closed at 2084 as a doji candle that was sticksaved at the daily 20EMA support.
Still nothing has changed with today’s session, the consolidation phase continues:
  • This is a bull train until price proves otherwise as it is above the daily 8EMA and 20EMA.
  •  As long as price remains above 2070, the immediate targets are 2100 and 2110.
  • The intermediate target is now the cup and handle 100% measure move that targets 2128.50.
For bears: breaking below 2070 would be your first hint of bull train exhaustion and warning. If below 2065 decisively, then bears would target back to the 2059 support first and 2045 for extension.

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We will be taking the rest of the week off trading/posting as time is better spent rejuvenating and avoiding burnout than trading “hard money” setups. The KISS updates will resume on the weekend/Monday.