SPX Coiled Very Tight For A Move: August 19th Trade Plan

In yesterdays newsletter I wrote: “We just went through a clean trend period and therefore the risk that we continue in choppy, corrective action is high” and “Broadly I see everything between 4295-4305 and 4270 as being complete noise”. ES certainly took this to heart today. It made the trip between ~4295 and 4270 three times (95 to ~70 in the morning, back to 95, back to 70, then closing the day back at 95).

After the 211 point rally from August 10th, markets invariably go into a consolidation mode, where price looks to trap bulls and bears inside a range for several days in order to setup its next directional move. The last consolidation phase as readers here recall was from July 31st to August 10th where ES played ping pong in a mostly 70 point range, before exploding upwards.

This consolidation will resolve, as they all do, with a large move. Tomorrow is OPEX Friday and its quite common for price to chop into OPEX then move. In today’s newsletter, I’ll be talking about my strategy for trading chop, the pattern forming here, and what the triggers are for moves tomorrow