Now, something of value. I am short the $ES from 1310. I like being short in this area because there is downside momentum and it has not been easy to get on the train, whether bull nor bear. You are forced to sell when others are buying and vice-versa. Here is what I am seeing.
Lets start with the Daily chart. $ES is trading right up to the Lower Momentum level (-1 Std Dev). As you can see from the first half of June, the Lower Momentum level held the $ES in check for 8 sessions after it closed below Lower Mo on June 1st. If $ES moves down and closes near the 7/18 Low of 1291.25, the slope of the Bands will begin to diverge and that will stoke the fire of momentum.
Lets dial this trade into a lower time frame, the 240 min chart. The $ES has rallied 20.25 handles from the 7/18 Low without a pullback, in this time frame. I am not fading this market purely because it has rallied 20 handles. $ES has rallied right into the Upper Momentum on the 240, which has a slight downward slope. Again, if $ES trades to the downside and we get a red candle on the 240, the slop of the bands will begin to point down. This gives us more momentum.
Every single trade we enter needs a business plan and you owe it to yourself to develop one. If I am wrong, my stop point is above the July 15th and 18th highs of 1315.50 and 1314.75 respectively. A secondary stop I will run is if $ES closes above Upper Mo on the 240. I like this type of stop because price action is leading us to discover that there is a change of momentum occurring. I am risking a little over 5 handles from my short entry of 1310.00, but the risk could be less if we close above that Upper Mo band. On the reward side, I am looking for the July 18th Low of 1291.25 and then the area of 1275, which has plenty of price action from June.
Be Well,
Hemi
Update: As of 10:26am CST, I am still short $ES_F with a stop above the high of the last 3 days. We are getting some constructive price action. For this trade to work, $ES_F needs to get under 1312 technically, and then close under 1309.75 by 12:30 CST, which is that Upper Momentum band I discussed in the Blog Post. If by 12:30 CST we are not under 1309.75, I'm out.
ReplyDeletePeace
This is exactly why we have a plan in place for each and every trade. You just never know and a two-sided plan takes away the emotion. I was stopped out on the spike @ 12:30 CST. Moved on and made money in Hogs and Corn. All-in-All, a good day.
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