Was The Recent Bounce In SPX A Bull Trap, Or A Bottom? August 23rd Plan

Back on Friday, ES broke its three day red streak by putting in a daily bullish reversal candle. As a result of this - and other factors which I discussed extensively - I was looking for a relief rally to start this week as long as 4370 held. It held yesterday, and we squeezed 60+ points.

I concluded yesterdays newsletter (when price was 4415) with the following quote: “Bulls aren’t out of the woods yet by any means, but the fact we spent two days basing now is a healthy sign. My general lean is we can base build now 4392-4420. This would set up a push to 4442”. After dipping to 4405 support and basing overnight, ES wasted no time running to that ~4442 target. Bulls certainly weren’t out of the woods though and we saw a deep sell from that ~4442 target zone, which was a zone I provided to try shorts “My preferred areas to stalk shorts would be 4442 to catch some points”.

Despite all this volatility though - ES has gone nowhere and we are right we were on Friday/Monday in that 4390-4400 support cluster. Is ES building a base for a bottom, or setting up its next leg down? I’ll talk this in today’s newsletter, I’ll then breakdown the pattern that triggered yesterdays 60+ point rally. I’ll then provide the actionable trade plan for tomorrow.