Sunday Evening S&P-500 Update
Its the typical Sunday gap down in #ES_F and everyone knows the drill. 6592 remains key support which was gapped below at the open. Bulls need to backtest it now and recover to see 6604, 6616, 6624+.
Bullish Case for Monday
On Monday evening at 830PM, ES put in a massive Failed Breakdown where we swept the Sunday/Monday regular hours shelf of lows at 6360 down to 6353. We then rallied ~290 points into this week’s highs. After a big squeeze like this, a dip is inevitable, but the question is whether or not that dip gets bought on the first pullback. Today it did, we sold down to 6506, recovered a big low at 6520 set at 2am around 9:30AM, and ripped. With the dip bought, the task for bulls now is to keep the momentum going and we will hold runners.” In a strong bull case for Monday, ES won’t lose 6592 from here (or if it does, quick trap below then recovery). From there, we will simply resume up to 6624 (note that 6624 is now resistance of the white declining channel extending from February highs in the below chart – this is a massive flag). Above there we rally to 6677, then 6716+. In terms of spots to add on strength, this entire region is extremely trappy now, but reclaims of 6624 are a possible entry. I won’t take this one.
Bearish Case
Bear case tomorrow: No real bear case until 6500 fails which is a ways down now. There is a possible short below 6593 now though. These types of level loss shorts below a support are called breakdown trades. My core edge is failed breakdowns, and the reason is this is an edge is the vast majority of break downs (80%) trap. I do not take these trades personally. They take great skill to execute, and even when done well by a trader who has mastered these setups, one should expect over 60% to fail (they are low win rate, high R/R trades. 2 or 3 in a row will fail, then the 4th will pay out huge). *If you don’t like these odds and can’t tolerate being trapped – simply don’t take them. I consider breakdown trades to be an advanced setup type so if a newer subscriber, there is nothing wrong with passing on these. For the 6593 short ideally we see a final bounce there OR Failed Breakdown. After this, you can short below the lows of wherever that bounce is. Likely trigger around 6585.
Summary
In summary for Monday: My general lean is that ES can hold 6592 though (or quick trap below). From there we resume up to 6624, 6647. Perhaps final dip there, then breakout sees 6677, 6688, 6716.
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