2 Weeks of Basing Is Close To Breakout In SPX: October 18th Trading Plan
By now, traders should be getting the drill: We had a 2.6% big green day last Thursday, a 2.2% big red day Friday, and another 2%+ big green day today. “Bulls” and “bears” each loudly claim victory on each push, but ultimately we are in the exact same spot as late September. Only traders are making money.
The market is stuck on repeat for 3 weeks selling to the 3585 area, holding it or faking below like Thursday, rallying out then returning to it. In these situations it is essential to zoom out. After a massive down-trend from August 16th high, the last 3 weeks have represented basing, as ES sets up what could be a multi-week trend move.
In my last newsletter, I wrote: “As long as above 3585-75, I will continue to be objective and lean with the failed breakdown which triggered Thursday after CPI…rally back to 3675-3700, dip again, then attempt the break to 3775+”. This played out nicely today as we rallied to 3700 then dipped. In today’s newsletter, I’ll discuss the pattern I believe is forming the past three weeks, how I use classical chart patterns, and the plan for rest of week.