SPX Breaks Out A 2 Week Range. Can It Follow Through? March 25 Plan
Last week, ES finally snapped a 4 red week losing streak; the largest since the start of the last bear market in April 2022 and began a monster squeeze. While the market has been volatile lately and headline driven, the technicals have been precise giving us clear parameters to trade around and ensuring we were on board for this rally. As I frequently discuss, I like to think of all price action in ES being comprised of three building blocks, each correlating with one of my setup types (Failed Breakdowns, Back-Test, Breakdowns).
On March 10th, ES Broke Down a massive 4 month “megaphone” pattern at 5750-55 and sold 200 points. What comes after major breakdowns? Rallies to Back-Test the break down zone, but price needs a setup to do so, and this is typically my core setup & primary building block: The Failed Breakdown. On Thursday March 13th, we got this when ES flushed the Tuesday March 11th low at 5586, sold 20 points, recovered it, and triggered long. I have been long since this date, as updated daily, for +200 points.
The target for this rally begining March 10th was the Back-Test of the megaphone pattern at 5747-55 and last week, we back-tested this structure an incredible 4 times. Levels weaken with each test though and heading into this week, I was looking for another test of 5750 and then *finally* a breakout attempt. I wrote on Friday at 4pm: “The pathway here would look something like defend 5699 then work back up to 5747-55. Perhaps 1 final dip there, then breakout. 5782, 5795, 5809, 5824, then 5850 are the targets for the next leg.” Right off the futures open last night we got exactly this. We tagged 5747-55 once again, saw one final dip, then we were off to the races, hitting ~5824 high of day.
ES has broken out the range it had been stuck in ultimately for the last two weeks, with 5747-55 resistance. Now, bulls need to hold it. Can they? In today’s newsletter I’ll talk this, I’ll do a deep dive into some of the action we saw at 5686 on Thursday/Friday because this singular level saw all three of my setup types in the span of two days and this ultimately set up today’s monster squeeze. Finally, I’ll discuss the actionable trade plan for tomorrow.