The Final Battle Part 2
Today’s session was fairly straight forward as
it was very similar to what was expected from last night’s report. The overnight
session made a marginal higher high that tested against the major downtrend
resistance line and bears found their footing. During the premarket, we shorted
at 2070 when we saw the overnight pattern and the hourly extreme overbought
signal confirming again. The trade had an initial risk of 3 for 10 that we
trailed into a homerun for the 2054 and 2038 target extensions.
The bears had another chance to hop on the
bear train with the 15m 20EMA rejection in the afternoon but unfortunately we
had to step away from the office and missed it. Admittedly, we did not expect
2021 to be hit until Friday, but the bear train was impressive and fulfilled it
with the second leg by the end of the day. This goes to show you never want to step
in front of a train, but rather just hop on and enjoy the ride of high
probability setup along with the great risk vs. reward. Overall, it was just a
15m 8EMA+20EMA bear train re-entries day so bears had a field day scalping and
intraday swinging short.
What’s next?
Daily closed at 2023, this is below all the moving averages
except the 100SMA. It was also a large bear engulf candle, which suggests the “hold
half and go” setup/straight continuation down.
Bears did a great job today as we discussed the possibility
of a hard rejection in the 61.8%-78.6% fib retracement area last night. The
immediate targets of 2045 and 2038 have been fulfilled.
Our thesis remains the same, as long as no daily close below
2022 then the odds favour the bulls here based on the statistics of Santa Claus
Rally since 1950. A close below 2022 with follow through below 2000 would be a
huge threat to the bulls as the double top setup would come back to life. Remember,
double top 61.8% fib targets 1932.68 and 100% measure move at 1892.
Currently, the hourly extreme oversold signal confirmed at
2017.50 around 8PM so it is setting up for a bounce tomorrow.
There is no immediate target for tomorrow as it is monthly
options expiration and quadruple witching. If the usual happens, then we expect
a quick bounce to find a range high and then range low to kill both sides then
flatten at lunch for the decay.
What really matters to us is whether daily closes above or
below 2022. Then, early next week Monday and Tuesday shall give us the final
battle confirmation of the intermediate roadmap. It should determine whether
the market is heading towards 2105 or 1945.
Current plan for tomorrow: trade 8AM – 11AM and peace out.
