*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*
This morning’s CPI report sparked an absolutely massive sell off from the key fib zone(s). So far the counts are tracking nicely, but let’s remember that we are here to TRADE, not predict & hope. There is more than one path in play and we must act accordingly. Keep in mind that we still have a couple pre-market volatility events this week – PPI (tomorrow) and retail sales numbers (Thursday) – so manage your risk! Let’s get into the charts:
- No changes to the HTF view. We are approaching a major inflection point. Also, take note of the bearish engulfing daily candles… bears have the advantage at the moment.
- The CPI data this morning produced a strong sell off from some key locations. For $ES this came from the 0.618 fib and for $NQ this was from 45m supply. If you were
crazybrave enough to take a short into CPI this morning, congrats; but before we get too excited about the end of the world, let’s discuss the two main possibilities from here. - At the moment the Sep6 low is extremely likely to be taken out, probably this week. From there, price will find itself at a key inflection point. A sharp & impulsive bounce from the 3730-3830 range could lead to a Y-Wave of a complex HTF correction towards 4500. I don’t consider this the most likely scenario, but it would be foolish to ignore the possibility. IF this fib zone produces a strong and impulsive reaction, bears should consider it a big warning sign.
- In the shorter term, I would like to see a corrective retrace into the 20m supply zones that were formed today. While we of course could see a corrective bounce up into the typical 0.618-0.786 range, I suspect the retrace will be a bit more shallow given the aggression of todays move down. It would be ideal (not required) if this retrace came before breaking below the Sep6 low.
- If this corrective retrace does come to fruition it will be a significant hint towards the more bearish route to new yearly lows (blue path from above). If the retrace does NOT happen, bears should heed caution and beware the (orange) WXY alternate.
$ES 4H Exhaustive Move Example
- If price continues directly into the ‘key zone’ with no substantial retrace, the odds of a sharp bounce will be elevated. This ‘exhaustive’ arrival would favor the bulls.
- A closer look at some of the LTF zones of interest. The indices are currently in hourly demand which could help spark the retrace I’m looking for.
- One way or another, $ARKK still looks primed for a trip below $35. If the indices find a bounce here $ARKK might sneak to daily supply with some relative strength, but the more direct path down seems more probable at the moment… Either way, the destination is the same.
- $AAPL remains nicely aligned with the indices. I will continue to watch market leaders for hints.