Bear Engulf Continuation
Today’s session was relatively simple and straight forward once the bears were able to break the 2072 8AM hourly candle low at the day session open. This is due to the overnight session’s lower high rejection setup at the 2095 backtest level. If you recall from last night’s report we discussed the possibility of bulls having the Leg 2 of the deadcat bounce up to 2090-2095 and having similarities with the November 11th breakdown setup. The plan was to re-short the deadcat bounces and bulls were able to hit that zone from 5AM-6AM Eastern which meant not many traders were able to enter at such a key level. However, the bears had another high probability chase setup at the day session open, when the market quickly rolled over back into the low end of the blue price channel and decisively brokedown with the 9AM hourly bar. Overall, the day was just a standard textbook 15minute 20EMA re-entries bear train that accelerated into a 15minute 8EMA bear.
Even though it was great day in terms of P&L that recovered most of the week’s drawdown, we noticed we did not trade to our potential/standards. As our scalp futures account exited a lot of shorts prematurely ahead of targets and had to re-enter shorts in a chasing manner. It is very important to quickly review one’s performance at the end of each session and realize if there were any execution/rookie mistakes even on days that are profitable. Being critical of yourself is how we’ve been able to have continuous improvement over the years. At the end of the day, this is how we try to enhance our trading performance to be as consistent as possible.
The most important thing to take away today’s bear trend day is that not only did the intraday target of 2058-2060 fulfill but the short-term swing target at 2042-2045 was fulfilled as well. Remember, the market has been trading inside the blue channel range for the past 10 sessions so this means that the decisive breakdown combined momentum has a possibility large extension on the daily chart perspective.
What’s next?
Daily closed at 2053.5, this is below daily 8EMA, 20EMA and 200SMA. There’s a possibility of an inside day tomorrow if bears are unable to take out 2036 decisively. Currently, the daily 50SMA is 2038.9 as of writing.
The hourly extreme oversold signal that was confirmed at the end of the day session has fulfilled the Leg 1 of the deadcat bounce target. There could still be a Leg 2 deadcat bounce up just like last night’s action, but that is currently wishy washy.
The important thing to note is that as long as prices remain below 2072 daily 20EMA or ideally below roughly half of today’s range which is at 2067.50, then the immediate targets are 2020 and 2012 given the current daily double top/lower high formation. However, there’s a medium-high probability that tomorrow will be stuck between daily 50SMA and 2070 so it’s important to adapt accordingly. Our current plan is to just trade the morning tomorrow in a rangebound strategy unless 2039 or 2072 gets taken out decisively.
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How to Trade the KISS Reports?
Novice readers have asked me how to trade and act on the immediate and intermediate targets that we provide, the answer is quite simple - you don’t. We write these nightly reports as our own personal roadmap reference/plans for the next day and use the levels to trade in the trend’s direction until price proves otherwise.
For example, it does not mean we are going to short right here at 2055 for the 2020 and 2012 targets, it just means that if we get a great entry at 2065 tomorrow then we could attempt a short given the deadcat bounce context as long as bulls do not reclaim 2072. It is all about trading your own plan while using your own risk profile. The relatively high win rate for the immediate targets is mainly just due to the old trading cliché the trend is your friend. Many of our novice students seem to fail at this very lesson mainly due to inadequate experience and necessary feel of the markets.
