CPI Report Delivers A Massive Bear Trap: Is The Low In? October 14th Plan
As readers know, I spent this entire week “hyping up” the significance of todays CPI report ad nauseum, and it certainly did not disappoint putting in a 3.9% down move then 5%+ rally in the same day. In yesterdays newsletter, I wrote: “A common theme on these data days is there is an initial trap move often in the 1st hour…. For this reason, failed breakdown setups are your best friend in the period after FOMC, CPI, NFP, PPI days.”
This played out exactly, and we put in an initial 140 point drop right after CPI, clipped the 3510 support level mentioned yesterday, and then put in my core trading setup: The failed breakdown, and today could not have been a more textbook example of it. This is all well and good, but the question as always is; what now? As readers know, these types of failed breakdowns are often associated with tradable (key word) lows and the 250 point rally that kicked off October was triggered by the same setup. This one is much bigger.
In todays newsletter, I’ll be talking the failed breakdown setup (my core pattern with illustrations) and how to trade it with today as reference, then I’ll be talking what this targets in the coming days and actionable plan tomorrow.