ES Finally Breaks Out Its Range, Now What? June 10th Plan
As I write here on a daily basis, markets do only two things: They consolidate, and then they trend powerfully, and these two states cycle back and forth. For the last week, ES was coiling and consolidating into a picture perfect triangle pattern. Today, we finally got the range break, and it was to the downside, producing the sizable move that most had waited on.
Today’s breakdown was certainly a win for bears, but does this mean that the top is now in and ES is safely headed to new lows? Not quite: CPI is tomorrow and the reaction to that will likely determine how “real” today’s move was. With an elevated number certainly priced in by now, I would not surprised if bulls aren’t done yet.
I spoke about the possibility of a fake breakdown in yesterdays newsletter, writing: “While many are expecting this pattern to break directly either up or down, with CPI and FOMC coming (which are known for trap initial moves) it is also possible price fakes it out one way or another then reverses. For example, we could spike down to 4035 or 3985 then rally”. Tomorrows action will be critical, and bulls have a very small window to stop a melt-down to new lows. Today, I’ll discuss the plan for how I’m trading it, as well as talk about how I traded today’s mess…the good, the bad, and the ugly.