Make or Break Part 2
Today’s session was similar
to the previous two days, at around the morning open the market makes a marginal
lower low vs. the overnight session’s support that lures the bears into a breakdown
trade setup to the downside and the afternoon consists of selling the rip. In the
morning, the bears get no follow through and subsequently bulls manage a large
15min bull bar off that range low support and thus the feedback loop of bears
having to cover and bulls chasing begins. By 10:40AM, the bulls managed to
retest the 2062.37 61.8% fib retracement of yesterday’s high vs. low where it
was quickly rejected and dropped 14 points. Later in the afternoon, the bulls managed
a new intraday high of 2067 and that was also the daily 8EMA resistance with
1HR 100SMA where bears once again rejected and dropped almost 20 points into
the close.
Funny enough that we hinted
about the possibility of an inside day before the day session had opened, but
the bear trap with the marginal lower low lured us into a breakout trade was
again even though it’s a rangebound market. We think the inability to adapt immediately
these past few days are largely due to the market in the previous weeks being relatively
easy trending days and our style of trading breakouts had worked extremely
well. That has conditioned us to trade only using our breakout style strategies
and now unable to adapt quickly enough back into using our rangebound
strategies. As you can see, this is created a huge execution problem and the
dynamic market takes no prisoners. It’s not the market, it’s you stupid!
What’s next? (All charts and levels are now the continuous contract)
Daily closed at
2050.5 as a top wick rejection off the 8EMA resistance and below all my moving
averages except 100SMA.
The immediate target
remains at 2025 for the bear continuation pattern, as long as price remains below
the daily 8EMA 2060. The hourly chart clearly shows the series of lower highs
formation and that today’s inside bar rejection at the 8EMA created a promising
setup for the bears.
The caveat is still
the same as last night which is the context of the weekly chart still has the “hold
half and go” setup from Nov 16. This means it is very important battle for both
sides here. If bulls are unable to sticksave, then this opens up the
possibility of retesting the 1993-2000 support on the weekly chart. If bears are
unable to break down 2034.25 tomorrow then the range shake likely continues
into next week’s Fed day.
