SPX Finally Puts In A Reversal Day. Another Bull Trap? August 21st Plan

This week has been a good masterclass in what I call “Technical Analysis 101”. As discussed extensively, from the March low until Tuesday, only one structure mattered in ES: The perfect uptrend channel connecting the March and May lows and as long as ES was inside it, bulls remained in control.

On Tuesday, the most significant technical event arguably of 2023 occurred, and ES lost this structure, breaking it down. In the newsletter Tuesday sent out after the close, I acknowledged this, writing: “It finally cracked and this is the most significant technical breakdown in many months”. I noted on Monday that 4456 would be the trigger short, adding “then I’d look short 4456 for what should fantastic, very deep sell”. This played out, and ES went into a 100+ point multi-day selloff, with Tuesday, Wednesday, and Thursday being the deepest 3 day sell since right before the March low.

Today though, ES *finally* managed to put in a green recovery day, in the form of a hammer candle, and this has been rare. How big will the bounce be, if any? In today’s newsletter I’ll address this, I’ll then breakdown yesterdays fantastic short setup, then discuss the actionable trade plan for Monday