SPX Is Setting Up For A Large Move. February 9th Trade Plan

For the past three days, I have been discussing a single structure in ES, and one that has driven all my trading: A 1 week flag pattern with ~4175 resistance and 4095 support. This is clearly visible on a 1hr chart as ES builds a sideways base after last weeks 200 point post-FOMC rally. Back on Monday, I stated that ES likely spends the week “filling out” this pattern, likely until CPI next Tuesday.

Fill out it has, and yesterday we sold to flag support ~4095, rallied to flag resistance. I wrote yesterday: “More chop may be ahead. My general lean remains unchanged from above which is that we fill out the flag…If we sell down tomorrow, bulls do not want to see lower than 4128-30”. Fill out the flag we did; selling to that 4128-30, holding all day.

This pattern will set up a large, multi-day trend, and market is just waiting on a catalyst for it. Until then, this will require tactical, flexible day trading. In today’s newsletter, I’ll address the big picture setup/targets, talk my approach to trading inside these bi-directional rangebound conditions, then provide the actionable trade plan for tomorrow.