4 Ways to Trade this ‘Snap Back’ Reversal

Are you seeing this ‘Snap Back’ Reversal?

We had big moves on low volume over the holiday break, which sets-up perfectly for this week’s “Snap Back” reversal trade…

But before you go chasing the market higher, make sure you have these (4) four price-action setups on your radar for Wednesday…

E-Mini S&P (ES):

E-Mini Keys to Success:

• Big Move today often means a range coming tomorrow
• Bears took price lower at the open this morning, but buyers stepped-in with a reversal off the previous all-time high and price appears to be hunting for a retest of today’s high.
• With bulls in control of the trend, I’m looking to buy pullbacks and bear-traps as the market tries to complete the move back to the highs.
• Sellers don’t have any momentum, so they need to wait for exhaustion at the highs or a reversal going lower.

Top 3 Trades for Tomorrow: 

• UP – Buy the bear-traps (or) sell the 2-try failure off the highs
• DOWN – buy the seller failure (or) sell the 123-Reversal
• SIDEWAYS – wait for the new range, then buy support levels below it.

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• Big moves on the chart today often mean small ranges tomorrow
• Bulls took control at the beginning, and even after sellers grabbed control mid-day, buyers were able to snap back to the highs after buyers entered on the deep pullback.
• Buyers have the momentum, so I’ll be looking to buy pullbacks at support levels and jump in with bear-traps if price shoots higher.
• Sellers don’t have much to work with (yet); they need an exhaustion reversal off the high, or a 123-Reversal running lower.

Top 3 Trades for Tomorrow: 

• UP – buy the bear-trap (or) sell the 2try reversal
• DOWN – buy the seller failure (or) sell the 123-Reversal
• SIDEWAYS – avoid the range, buy at support levels below it with seller failures.

Gold Futures (GC):

Gold Keys to Success:

• Another big move day, anticipate a narrow range tomorrow
• Buyers took control early with a Spike & Range, but this strong move lower gives sellers all the momentum as they try to go back into the range from last week down at 1778.5.

Top 3 Trades for Tomorrow: 

• UP – buy the bear-trap (or) sell the buyer failure
• DOWN – buy the seller failure (or) sell the bull-trap
• SIDEWAYS – sit on hands for the new range, sell resistance above it.