Video Transcript:
All right, let’s take a look at the S&P 500 overnight action. Essentially, it just carried on with yesterday’s range-based day, slightly lower than yesterday. We have a lower high set from the overnight high and just a slightly lower low here. So, the momentum in this particular consolidation is slightly down before the pre-market.
Moving into the overnight sessions: the Asian session was ranging, the London session was ranging. So, we’re going to keep the levels the same as they were yesterday. I did make a couple of adjustments up top here—slightly pushed this down a few points and then took this high up here. We’re looking for the same setups again today: a breakdown through here, either a clean bearish close through 6456, holding this trend line, and then moving down to take out some of these lower-end targets. Either that, or on the downside, we’re looking for a failed breakdown where price drops quickly, then recovers and absorbs a whole bunch of aggressive sellers on the way back up to take out some of the upper levels.
On the upside, we’re looking for a breakout above last week’s POC. I want to see this clear and also tag the London high from yesterday. I’d like to see a bullish close through here, hold the level, and then begin to attack these upside targets—retracing back to Friday’s all-time high and possibly pushing into upper extensions. Alternatively, I’d like to see a failed breakout here: the same structure as the downside setup. A failed break followed by a reversal back to the downside, showing we’re likely to start retracing through the weekly value area.
All right, good afternoon. Let’s take a look at the market close, starting with the ES. Obviously, we had a bearish retracement day, taking out the daily gap left from last Tuesday’s CPI print and its big expansion move up. Today, we retraced that move to the downside. We broke out of a 4-day consolidation and pushed lower.
Looking at the opening, it was a clustered mess right off the start. It looked like we were going to break out. If you notice here, this candle broke up, cleared all of the EMAs to the upside, and closed through them. The pullback didn’t hold, and we ended up pushing back down into the EMAs and failed to break out again. Looking at this move here, could it have easily tagged higher and continued up? Yes, it could have—but it didn’t. We ran out of buyers, broke back down, and completely erased this violent bar to the upside (3,400 contracts) within the next two candles. Then we broke down through VWAP.
There was a trade opportunity here, but I didn’t take it. I waited for the bearish break to clear, which happened on this very strong candle: -3,768 contracts. The pullback held, and the short entry was right here, giving a 9-point trade.
Later, just after the noon hour, a very similar structure appeared. We had a strong break, the 3891 pullback held over two bars, and although we wicked through, towards the tail end of this bar I entered off the clearance. It took a little heat, but eventually broke down to target for about a 7.5-point move. Those were my only two trades of the day.
It looked like one more setup might have developed here, but it was very choppy around the 6430 level. The market is now running out of steam into the close, failing to hit target three by about two points to the downside.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm funded traders every day, click the link below the video and hop aboard. We look forward to trading with you.
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