Members’ Newsletter 1/17

*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*

Good afternoon! Price found a small reaction from supply today but so far this was not enough for a trend reversal. Today’s quiet action means that everything mentioned in the weekend prep still applies… So, instead of just repeating myself I’ve decided to go a different direction today’s newsletter. Today I will do a quick recap of the current situation followed by a deep dive into the concept of TREND.

**Make sure you’ve read yesterday’s weekend prep post before continuing!

High/Mid Timeframe Context (reminder):

$ES 2D

$NQ 2D

$ES 8H

$NQ 8H

• HTF and MTF context remain bearish… Looking for a reversal from this area to spark the next wave down. Bears need $ES to remain below 4080, otherwise bullish alts come into play.

Gameplan:

$ES 1H

• My gameplan for the week remains the same. I will remain in scalp mode until price either forms a reversal structure or breaks through supply.

Let’s talk about TREND…

What is trend?

• Basic trend is defined by highs and lows. In an uptrend, price makes HIGHER highs and higher lows. In a downtrend, price makes LOWER lows and lower highs. For most, this is pretty simple… stick with me…

How can we properly identify a trend break?

• A trend break occurs when a TREND PIVOT is crossed. For example, an uptrend is broken when price crosses the most recent higher low. If a lower high then follows, a downtrend has started. The reverse applies when breaking a downtrend.

How does TIMEFRAME connect to trend?

• Timeframe and trend are significantly connected as there are different trends on different timeframes. Understanding basic trend is step one… the next step comes in evaluating trend on multiple timeframes simultaneously. Let’s consider the example above:
  
  The chart above displays a major uptrend. All timeframes are trending upwards, from high timeframe to micro timeframe. Essentially, it is an uptrend within an uptrend within an uptrend, etc… Notice that price could break the micro uptrend while still maintaining the LTF, MTF and HTF uptrend…
  
  Let’s say we are looking for a trend break to create a swing short opportunity all the way back to the origin of the uptrend. What TIMEFRAME trend break would we need to feel comfortable taking that short? Would we have to wait until the HTF trend break? Would a micro trend break be enough?
  
  There is not just one correct answer to these questions, to an extent it depends on the situation and the system being used. Personally (and very generally), I am looking for a trend reversal one or two timeframe steps below my target… For example, a HTF target would require a mid or low timeframe reversal. On the other hand, a LTF target may require just a micro trend break.
  
  Of course, this is all subject to the situation at the time it occurs. I could probably write 100 pages and still not cover all the nuance involved… The important part is that we evaluate trend as a whole, on all timeframes, not just one.

How can this be applied to the current situation?

$ES 1W

$ES 8H

$ES 2H

• Building on the discussion of trend on multiple timeframes, let’s analyze the current situation…
  
  HTF – DOWN
  MTF – Uptrend broken, downtrend pending
  LTF – UP
  Micro – UP
  
  In this situation I am looking for a HTF swing short… in order to ‘clear the way’ for this short, the LTF trend needs to be reversed. Notice, the LTF trend key pivot low is at 3962. Until then, all of my activity will occur on or below the micro timeframe.
  
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  I hope you enjoyed today’s newsletter, I am open to feedback as always. I expect tomorrow’s update to be back to the ‘normal’ format. Have a great night!