Weekend Prep – February 2022 – Week 2

*disclaimer: Not financial advice. This is my personal trade plan only. I am not qualified or licensed to advise anyone on their specific positions or trades, I am sharing my personal opinions only. Never make financial decisions based on any information on this site or any associated platforms. Always consult a professional for investment related advice and do your due diligence*

Overview:

The action this week can be described as choppy and indecisive, which makes sense given that we are probably still in the process of completing a wave 4. This chop/indecision may take some time to resolve. My approach to this week will be one of balance. I want to be prepared for both bearish and bullish scenarios in the short term and patient while I wait for long opportunities for the longer term.

$ES 1W

The weekly view perfectly captures the indecision in the markets. A break of this week’s low would form quite a bearish reversal pattern.

$ES 1D

On the daily we can see the bearish reversal came from the backtest of prior channel support. Bulls will need to take out 4600 to negate this pattern.

$NQ 1W

In the last two weeks price has effectively gone nowhere. The long upper wick opens the potential for a bearish reversal.

$NQ 1D

The FB earnings flop sparked this daily bearish reversal. Wednesday’s high will need to be taken out quickly if the bulls want to retake control.

Wave Counts:

$ES 3D

No changes — still in macro 4. This could end up going below 4150

$ES 8H

The higher degree corrective possibilities are unchanged – simply put, this is either wave B (or X) of the higher degree (X) wave, or the (X) is already in place and we are starting a more direct path down. Both possibilities are equally valid and will need day to day monitoring.

$ES 2H

A closer look at the two possible paths. There can be some lower degree deviations from these structures, but these encompass the main paths. A triangle (X) wave is also possible, but less likely.

$ES 30m

On the low time frame I am looking for a trip below 4400. The (B) wave is likely in place, but a bounce near 4460-70 could lead to a complex (B) to the .786.

$NQ 3D

No Changes – must hold 12,458

$NQ 8H

The possibilities for $NQ are the same as with $ES — I expect a move lower early in the week followed by a bounce to a ‘decision zone’. This should determine if (X) is in place or if we’ll see the bull trap to 16k. The white path has a slight edge based on the proportions and the fact that this is a high degree w4 off the covid lows – however, we have seen some quick and shallow Y’s over the last year. Both are very much in play.

$RTY 3D

No changes

$RTY 8H

Yesterday $RTY looked impulsive down and poised to go for the kill shot straight to 1870… but of course this would make my life too easy, so the markets decided to make things tricky (. There’s still a chance that this move down is impulsive, which would favor the orange path (and likely send $ES and $NQ to the orange paths also) – this requires some intense selling on Monday and Tuesday. If sellers fail to show up with strength we’ll likely see a complex w4 back to the 2080-90s. I have issue with aspects of both counts, Monday should show which is correct.

$RTY 30m

A look at the direct path down – Possibly a 1,2-1,2 situation. For this to play out there needs to be strong selling pressure on Monday.

$ARKK 30m

Following up once more on the $ARKK saga… this relative strength still cannot be ignored. If this strength is maintained the rest of the indices will likely take the paths higher in the mid term.

Setups: