10/20 Trading Plan - Thursday Recap and Day Ahead

Recap

After being in corrective mode for several days, ES arrived at the technical equivalent of ground zero - the 4330-36 zone. This zone is significant as it defines the uptrend that ES has been in for exactly 1 year. The arrival at this zone resulted in some of the most volatile, trap-filled, bipolar price action in many months. The 4330-36 zone was tested 5x over the past 24hrs, with multiple liquidity grabs below and multiple resultant 30-40 point squeezes, before finally losing it late day and flushing hard.

The Markets Overnight

🌏 Asia: Down
🌍 Europe: Down
🌎 US Index Futures: Down a bit
🛢 Crude Oil: Up
💵 Dollar: Unchanged
🧐 Yields: Down
🔮 Crypto: Up strongly

Major Global Catalysts

• Jay Powell’s hawkish statements.

• China imposes restrictions on graphite used in EV batteries in retaliation for new US chip export controls.

Snapshot

Daily

4-Hour

Key Structures

Two lines have been discussed for weeks and months. One is the core bull market trendline from October 2022, which fell 4336 yesterday. The other the horizontal trendline connecting the September 2022, Feb 2023, and June 2023 highs. These lines converged at the same spot at 4335-4330, causing significant price action.

Support Levels

4296-4302, 4280, 4268, 4222, 4213, 4205, 4182, 4153.

Resistance Levels

4330-35, 4355-57, 4373, 4385, 4413, 4418, 4439, 4460, 4468, 4480-85.

Trading Plan

For any "bull case" in a sustained sense, 4330-35 must reclaim. If we continue selling today, 4268 is the absolute lowest bulls can see, as below there we start down to new lows at 4222. In terms of spots to add on strength before 4335, reclaims of 4302 are of interest. The bear case today begins on the fail of 4296-4302. If ES accepts this zone overnight and clearly fails to push and builds a base - very low 4290s/high 4280s 1 spot to try a "breakdown short". The next "big short" for me comes on the fail of 4268.

Wrap Up

We have lost a major support at 4330-35 and put in a big red day. It is likely the level backtests from below now. My general lean is we can perhaps push lower to 4279 or 4268 lowest, then attempt to backtest 4330-35. If 4302 reclaims, we may backtest direct. New lows below 4268.

Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision.