ES levels & targets July 19thPlan for Friday: supports are 5585 (major), 5575, 5566-68 (major), 5558, 5553, 5542 (major), 5534, 5527, 5519 (major), 5511, 5502 (major), 5491, 5482 (major).
With the short idea at 5628 working so well today and bringing us down past 5585, I’ve decided to add a small long late day on the 5585 reclaim, seeing us put in a nice late day failed breakdown (Deja Vu from yesterday). In this case, we flushed the 1230PM 5590 low, then reclaimed, entering with part of today’s profits. As I’ve mentioned for two days now, I see sellers being in control still until buyers can conclusively reclaim some major resistances to turn that around, with 5630 being first up. Until then, all longs should be treated as high risk, high failure rate, and with small size. When bears are in control and ES is making new lows, I call these “knife catches” and they are inherently dangerous, in the same way shorting a new high in an uptrend is. From where we are now, 5585 is first support down, and this backtests the triangle shown in red. We’ve already worked this level quite extensively, it may have another test left in it though. If it does fail and we make a new low, the next major support down is 5666-68. While one could “knife catch” this, I’d rather see us flush today’s low, tag that zone, then reclaim to try a small long for a safer setup. Could this fail? Yes, bears are in control. Longs have been brutally spoiled now for weeks with every single long working, and now longs have to put a little more effort into where, and how one enters. If 5666 fails, I’d be looking at 5542 and 5519 as spots to try small sized longs.
Resistances are: 5593, 5598 (major), 5608 (major), 5611, 5616 (major), 5621, 5630-32 (major), 5640 (major), 5646 (major), 5649, 5655, 5660, 5668 (major). Obviously the 5630-32 level is a big one from here. One could try shorting it on the backtest and it may produce a decent reaction. Personally, I won’t be taking this as I’ll probably still be long into it, and I am not a fan of flipping long to short in macro uptrends.
Buyers case: Bears are currently in control, so 5630 must be reclaimed to give bulls their first technical "win" and shift the momentum back in their favor. For bulls, the goal tomorrow is for 5630 to be retested. Ideally, this retest would hold us above the 5585 level after today’s late-day failed breakdown. If there’s another low, it should be a brief dip below today’s low followed by a quick recovery. The bounce would then need to progress through 5608, 5616, and finally to 5630, which is a crucial level. A long entry is viable above 5630, but it requires patience and volume for confirmation and a pullback first, making it a more advanced entry.
Sellers case: The sellers case is now the default until 5630 reclaims. There are a couple shorts available tomorrow. The best is on the fail of 5566. As I say often, these types of shorts below a support are called breakdown trades. My core edge is trapping retail traders with failed breakdowns, and the reason is this is an edge is the vast majority of break downs (80%) end in trap. Markets always trap before they move. Breakdown trades take great skill to execute, and even when done well by a trader who has mastered these setups, one should expect over 60% to fail (they are low win rate, high R/R trades. 2 or 3 in a row will fail, then the 4th will pay out huge). As always though, I don’t chase. I’d need to see a bounce/failed breakdown of 5566 first . Only after this takes place, would I consider short 5564 or so for a move down the levels. There is a higher risk short available on the fail of 5585 as well. Again I’d ideally want to see a bounce here first to remove the “trapping factor” out of the level, then short a little below it. You don’t want to rush into these. 5542 would be the magnet for this, but as always take profits lvl to lvl.
In general, Today’s close is much like yesterdays. We had a day of selling, and bears remain fully and completely in control. My general lean is similar to yesterdays but at lower levels; as long as 5585 holds, bulls can try to pop to 5608, 5616, then 5630. If bears to take another leg down, it would be there (or even sooner if they are particularly motivated). If 5585 fails, we likely head down directly again.
