The Breakout Has Held, Where Are We Headed? July 29th Plan
The plan from yesterday could not have played out better. In yesterdays newsletter, I wrote: “As long as we are above that 3980-4000 area, my lean is we continue up to 4075-90”. After some typical post GDP report chop and volatility, we tested 3980-4000, held, then rallied in virtually a straight line to 4075-90 where regular trading hours closed. Futures are continuing the surge as of writing.
While there has been of noise/talk related to recession, definition of recession, Fed policy etc, the price action has been clear and simple as always: As I’ve discussed all week, ES was priming to breakout of a textbook downtrend channel from March. We broke out yesterday at ~4000, squeezed, back-tested it perfectly today, then squeezed again. For those new to channel trading, todays move shows how powerful it can be and its quite literally all you need to trade profitably.
We have essentially rallied non-stop now for two weeks, and while we did break out, there are some significant resistances overhead to watch, and risks mounting. In todays newsletter, I’ll talk how I traded today in relation to yesterdays plan, talk a little bit about channels, then take a big picture overview of where we are headed + risks