*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*
Well, I was wrong… I did not expect the rally we saw today, and certainly not one of such strength. While this does shake up the lower timeframe counts, it also makes things a bit more clear. The higher timeframe context is basically unaffected. Keep in mind that next week is FOMC week.
Before getting into the charts for next week I want to do a quick recap of today as it was a perfect example of why a thesis/confirmation based system is so powerful…
- Coming into today, I was looking for a reversal from 90m supply down towards 2H demand. The bulls made easy work of this supply, making it very clear that my thesis was WRONG. Of course, it’s never fun being wrong… but if I have to be wrong, THIS is how I want it to be – super obvious and almost immediately. Notice how today’s entire move was a lower timeframe (LTF) UPTREND. Price never even thought about reversing the LTF trend. Assuming you’ve watched my “How I Trade” video (the one pinned in bold at the top of every newsletter) then you know that in order to take a position, I need to see a reversal structure from my area of interest. The lack of any reversal today kept me from taking a short and getting wrecked. I wasn’t a winner today, but using a thesis/confirmation style system let me walk away from a train-wreck without a scratch.
- Many people who practice EWT attempt to use it as a predictive tool and trade based on the ‘predictions’ alone. With this approach, they would likely have gone short at the open and been taken for a painful ride. If you trade EWT, I strongly encourage you to treat it as a thesis building tool, not a crystal ball; and at least consider using a confirmation style entry system.
Ok ok ok… I’ll get off my soapbox. Let’s get into how things look heading into next week:
- The weekly candles closed with strength, especially on $ES. For now, the macro count remains the same with (B) simply extending a tad higher than originally expected.
- With today’s rally it appears the 3D supply zone on $ES will get taken out. This is of little concern to bears as there is 4D supply waiting above on BOTH $ES and $NQ. I originally expected a long/shallow (B) wave… instead it seems we’re getting a quick/steep one. The structure is still corrective and I still expect price to reverse lower in the end.
The only concern to the bears at the moment is the Dow. $YM has shown relative strength off the lows and is already at the 0.786 fib from the local high. If the August high is taken out, the counts could get quite tricky. A break of this level would set off all sorts metaphorical alarms and require some re-evaluation. Ideally this doesn’t come into play, but it’s important to be aware of.
- Today’s unexpected rally does come with some good news as it resolved the divergence between $ES and $NQ. Yesterday’s after hours sell off turned out to be a complete X wave for both indices. For $ES this wave was unusually short, but was fairly standard for $NQ. Today’s rally was impulsive in structure, putting the indices in what is likely wave A of Y of (B). This suggests a bit more upside next week before finding a top. It would not shock me to see a rally into FOMC only for Powell to slam it back down.
- The impulsive move up today left behind a solid chunk of demand. These zones will be on watch early in the week for potential long opportunities following a corrective B wave pullback.
- $AAPL was the bulls’ hero today as it recovered from -6% to +7% following yesterday’s earnings report. This sets up $AAPL nicely for a move into the golden zone where I will be looking for a reversal.
- $TSLA remains on watch for swing opportunities from 2D supply, assuming the indices cooperate.
- $PLTR will also be on watch for short opportunities from the 0.618 fib + 2D supply, if it gets there.
- I will be watching UCAD for a higher timeframe reversal out of 12H demand next week. Price has corrected to this zone and is showing bullish divergence. A proper reversal would have me long targeting the recent high.
Thanks for reading – Have a great weekend!