How Do I Trade these ‘Melt-Up’ Markets?

Markets are bullish going into Tuesday’s trading session, and with big inflation news on the schedule, combined with easy magnets back at major highs, it’s easy to see these markets “melting higher” on Tuesday morning…

“Melt-Up markets” can be challenging because we need to get aggressive, but it’s worth the effort because the targets are HUGE!

E-Mini S&P (ES):

E-Mini Keys to Success:

• Buyers had a strong “runaway” trend last Friday, which led to a sideways “range day” the following day. 
• We have two ranges on the chart and price expected to rotate back and forth between each of them.
• Our goal will be to trade the “edges” of these large range; buying low, selling high, avoid the middle and focus on failures (and breakouts) for entries.

Best Trades for Tomorrow: 

• Range = Focus on failures around the edges & watch for breakouts.
• Buy the seller failure around the lows of the range
• Sell the buyer failure around the highs of the range
• Trade the breakouts both higher and lower.

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• The day began with a choppy trading-range, but with this strong 123-breakout clearing through the pendulum-swing overhead, we know the bulls have firm control of this new trend.
• Buyers will be looking for entries on pullbacks and traps in an attempt to ride this open-loop breakout for another leg higher.
• Sellers have to sit on hands right now and wait for a reversal because they don’t have any momentum on their side.

Best Trades for Tomorrow:

• Trends = continuations and reversals.
• Buy the trap or seller failure down in the ‘Battle Zone’
• Buy the low of a developing range
• Sell the nested failure off these highs
• Sell the 123-Reversal going back into the range.

Gold Futures (GC):

Gold Keys to Success:

• Gold had a strong run higher on Friday so it’s no surprise to see buyers “buying the dip” today.
• Price-action was “grindy” as the market trended higher on low volume, telling us that the REAL buyers are likely waiting for the next pullback.
• I would expect either a deep pullback to attract new buyers, a trading-range as the market balances out, or a possible continuation going higher as a short squeeze from the big drop we saw earlier this year.

Best Trades for Tomorrow:

• Trend = continuations and reversals
• Buy the seller failure at support below.
• Buy the low of a developing range
• Buy an aggressive trap if we keep grinding higher.
• Sell the reversal off the highs.