Major Support Failure for ES, Rally Over? August 23rd Plan
Major drop of the ball for bulls today in ES. In my last newsletter, I wrote how I was holding a small short Friday for a test of 4190-4200, writing: “Bulls want to keep it above 4190-4200 or we start melt-down”. We got the test of 4190-4200, and overnight it failed. Absolutely no surprise what happened afterwards for the rest of the day: We put in the biggest red day of this rally cycle from June’s low.
The 4200 level was a critical line in the sand for bulls. Important to remember that this was the prior June high that brokeout August 10th, back-tested August 11th, then triggered a 125 point rally. Holding it was important for a direct rally leg, and its failure complicates the picture for bulls
There is, however, 1 silver lining in that the RSI is now at 2022 lows, despite only a few days of correction. This suggests major energy for a squeeze. In today’s newsletter, I’ll talk how I traded today relative to yesterdays plan, talk how the RSI is used in these situations (essential), and then talk the plan for tomorrow.