5 Ways to Trade this Breakout on Wednesday

Markets made some big moves on the charts today —  both the Emini and Nasdaq finished the day tumbling lower, and Gold made a strong run higher…

But look closely, and you’ll see the most important clue going into Wednesday — trading ranges, right in the middle of these charts!

Ranges act like magnets, and even though we had strong trends today, those ranges could easily make trouble if you’re caught chasing these moves…

Not to worry – I’ve dealt with situations like these many times before.  Here are my top 5 trades for breakouts, failures, and everything in between…

E-Mini S&P (ES):

E-Mini Keys to Success:

• FYI – Big move today often means a narrow range tomorrow
• Strong move lower into a range for the bears. 
• Sellers will be looking for shorts off resistance above the range, or breakouts going lower.
• Buyers need to stay patient, wait for a change in momentum with a 123-Reversal going higher, or buy a bounce off the lows.

Best Trades for Tomorrow: 

• UP – sell the buyer failure (or) buy the 123-Reversal
• DOWN – sell the 123-breakout
• SIDEWAYS – Sit on hands and wait for a pullback higher or breakout lower.

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• We began in a range today; buyers ran higher into the CPI news and then sellers took control and completed a full “rotation” back to the lows.
• Sellers have all the momentum and will be looking for shorts at resistance levels above, or breakouts going lower.
• Buyers need to stay patient for either a 123-Reversal going higher, or a 2-Try Reversal off the lows.

Best Trades for Tomorrow: 

• UP – sell the buyer failure (or) buy the 123-Reversal
• DOWN – sell the 123-breakout
• SIDEWAYS – wait for the new range to form, then sell resistance levels above it, or breakouts below it.

Gold Futures (GC):

Gold Keys to Success:

• Gold made a big move today, which often means a range is coming tomorrow.
• Sellers began the day with a strong move lower, but they failed to break free of the range and price reversed higher and completed a full pendulum-swing rotation.
• Buyers have all the momentum, but they need either (a) confirm the breakout with another leg higher, or (b) wait for a deep pullback and trap in the bears for a retest of the highs.
• Sellers have the easier job right now, but they need to wait for a failure off these highs, or just wait to ‘trade the rotation’ as price moves back towards the range.

Best Trades for Tomorrow: 

• UP – buy the 123-breakout (or) sell the buyer failure off the highs
• DOWN – sell the buyer failure (or) buy the 2try seller failure
• SIDEWAYS – sit on hands and wait for the new range, then buy support levels below it, or buy the breakout going higher.