The Short-Squeeze Continues in ES: RSI Getting Hot. August 16 Trade Plan
The endless squeeze continues in ES: In yesterdays newsletter, I wrote how I was looking to 4300-4305 then 4325 as long as we held the 4255 zone, and we saw (yet another) buyable dip into 4255 and nice squeeze from there as buy the dip remains the paradigm.
We are seeing the continued consequences today of one of the most powerful, basic technical setups in markets, which was the 4200 back-test last week. To recap: 4200 was the old June high. We broke it last week, rallied to 4260, sold off back to backtest 4200 (trapping shorts en route) then squeezed. We are now coming into a cluster of resistance, and, we are doing so with the Daily 5-period RSI most overbought since November 2021.
Does this mean a top is imminent? Overbought RSI is never a reason alone to short and RSI can remain overbought longer than most can remain solvent. It is reason for caution though. In today’s newsletter, I’ll talk todays trading, why I think we’ve got a little more to run, and talk the big risks here + RSI.