Bears Running Out Of Time

May 6, 2020

Tuesday’s session played out as a ‘gap up and go’ structure that faded in the final few minutes of regular trading hours (RTH). If you recall, RTH opened at 2863.25 after Monday’s closing print of 2827.5 on the Emini S&P 500 (ES), so it was a +1.2% gap up.  Then price action continued in the trending direction for the majority of the day, forming higher lows and higher highs as the northbound train goes towards the immediate targets. 

However, the bears made a counterattack around 2889.75 high, which was right near the 61.8% Fibonacci retracement of the 2965-2771 range, and swiftly backtested into our key support of 2850 by the end of the day.

The main takeaway is that the bulls had a textbook gap up and go structure, but failed at the last few minutes when the countertrend bears mounted a successful attack in order to disallow the bulls from closing at the dead highs of Tuesday’s session. This meant that bears are not truly dead yet as it’s still an ongoing battle within this consolidation zone.

Please be aware, the longer this consolidates/bull flags, then the chances become higher and higher for the ongoing bull trend/train given the context and momentum of the past few weeks. Bears are the ones running out of time right now, nervously looking for immediate reversal to the downside every single day and have been failing miserably at it.

What’s next?

Daily closed at 2859.75 on the ES and the daily chart timeframe’s structure is quite easy. Price action is trending above daily 8/20EMA as bulls held key support on Monday, and has bounced +100 points since then.

Summing up our game plan:

  • We’re bull biased, and when above 2850, 2900/2916/2930 are the immediate continuation targets.

  • When below 2850, 2830 and 2800 support levels open up immediately.

  • There is an ongoing feedback loop squeeze setup from 2771 Sunday night low and yesterday’s RTH low of 2788.50. Remember our rule, do not fight a train/feedback loop squeeze until the momentum actually turns. Otherwise, you will likely get killed 80% of the time dependent on timeframes.

  • 2771 Sunday low COULD be the low of the week already, unconfirmed, see how it develops.

  • We are on hold for our intermediate bearish bias until there’s a decisive breakdown below 2752, followed by 2717 indicating immediate momentum aligns with micro+intermediate timeframes. Know your timeframes!

See chart reviews and projections on the Emini S&P 500.

Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.

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