SPX Finally Breaks Out Its 2 Week Range. Where To From Here? June 25 Plan

For two weeks, ES had been stuck inside the same range, which I’ve defined daily as being 5978 support (we set big lows here on June 5th, June 12th, then put in 10 point Failed Breakdowns on June 19th and this Sunday), with resistance being up at 6081. Inside this range, 6050 has been the mid-point support or what I call a magnet. I’ve defined this pattern as being a bullish descending triangle. Yesterday, we broke it out.

As I’ve discussed at length though, while patterns are fun, they don’t help us trade. To trade, we need an entry setup and as readers know, mine is the Failed Breakdown. The past two weeks have seen a marriage between this triangle pattern, my core setup The Failed Breakdown, and headline flow originating from the Middle East conflict. Headlines and my core setup go hand in hand. The cycle is generally the same: Bearish headline causes price to flush, it loses a major low, puts in a Failed Breakdown, recovers. The chart pattern enters the picture here, because it tells us where the Failed Breakdowns are likely to occur and for two weeks, most my entries have occurred on Failed Breakdowns of 5978 triangle support. Remember, institutions accumulate longs by flushing supports, trapping shorts, recovering. They do this many times, often over days. It was this dynamic that caused the today’s squeeze.

We saw the perfect example of this in action over the weekend. We closed Friday at about 6025. I wrote on Friday at 4pm: “My general lean is always to defer to the trend, until it ends. 5978-82 to 6081= a range (descending triangle) with 6050 a key magnet inside. My lean is we work back up to 6050, then 6081. Above there, we can try breakout to 6099, 6124, 6143.” I also wrote on Friday at 4pm: “…Wait for a Failed Breakdown of Thursdays 5970 low. Perhaps down to 5964 and back up.”

We saw literally exactly this. At 6pm Sunday, we saw a marriage of all the above concepts: US striking Iran over the weekend lead to a bearish gap down. This took us to triangle support. We then flushed Thursday’s 5970 low, trapped shorts, recovered, and longs were triggered for what ended up being a 175 point move. We closed yesterday right at 6081 triangle resistance exact. Then into this morning, we ran to all three provided targets: 6099, 6124, 6143.

Now that the breakout is done, can bulls hold it? And where are we headed? In today’s newsletter I’ll talk this, I’ll do a deep dive into some of the Failed Breakdowns we had at the 5978 zone over the last week, with particular emphasis on the one we saw last Thursday where we flushed that zone, trapped shorts, rallied 100 points into Friday. We saw the exact same setup Sunday. Finally, I’ll discuss the actionable trade plan for tomorrow.