It’s always difficult to know what to expect on a no report Monday. Sometimes the markets will unfold in a narrow range with low volatility and sometimes it picks a direction and keeps going. Today I felt the bulls would have a difficult time taking price beyond last week’s highs unless some new information comes along to change trader expectations. The automatic spending cuts went into affect over the weekend and any news about how that affects the average US citizen would not be positive. Thus, if the ES does have directional movement, I was thinking to the downside.
After the cash open, the ES bounced off Friday 1516.50 close to drop down into the top of the DTG 13.50 level. A couple long opportunities did unfold there but I thought potential price movement was limited and so I passed on the opportunities. As is often the case, price moved further than I expected and the opportunities would have worked out just fine. No matter, I wanted a short trade given my bearish bias. Once price topped out in the DTG 17 level, a short opportunity unfolded. However, as explained in the annotated chart below, this opportunity unfolded a little bit differently than what I post as example trades.
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