Am I Too Early to Short This? (Reversal Strategy)

Are You Ready for a Busy Week?

We’re back to our desks for the 3^rd week of June, anticipated to be one of the most volatility weeks of the year, so I’m excited to be trading this week…

Buyers have control of our favorite markets, but with such strong breakouts higher today, I’ll be waiting for pullbacks or breakouts for the best entries…

Speaking of best entries – am I crazy to be looking for shorts right now?

I don’t think it’s that crazy, as long as we get the right setup. Here’s what I’m looking for tomorrow morning…

E-Mini S&P (ES):

E-Mini Keys to Success:

• Bullish into a spike and channel with a range below us acting like a magnet.
• Buyers have control with a strong push higher, but they need to hold these highs or price will likely come crashing down into the range below us.

Best Trades for Tomorrow: 

• Range = Failures, Rotation, Breakouts
• Sell the buyer failure off these highs
• Sell the 123-Reversal to complete pendulum-swing rotation
• Buy the breakout to new highs
• Buy the low of a new range?

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• Nasdaq spiked higher to finish today’s session, testing the high of the spike and channel as resistance.
• Buyers have control, but I don’t like buying way up here, so I’ll be waiting for longs off the low of the channel or shorts using reversals going back into the range below us.

Best Trades for Tomorrow:

• Trend = Continuations & Reversals
• Sell the buyer failure off these highs
• Sell the 123-Reversal back into the range below
• Buy the pullback to the low of the channel
• Buy the breakout up to the measured-move target overhead.

Gold Futures (GC):

Gold Keys to Success:

• Bears took price lower in the overnight, but a strong 123-Reversal off the measured-move gives buyers control of momentum and the potential for a short-covering rally (short squeeze) on Tuesday.
• I’d love to buy below the range using failures off the low of the channel, or buy bull breakouts to new highs.
• Sellers have to be careful not to force anything because they don’t have momentum, but if sellers can get some momentum going lower I’ll be looking for trap entries before we retest major lows.

Best Trades for Tomorrow:

• Range = Reversals, Rotation & Breakouts
• Buy failures off channel lows
• Buy breakouts to new highs
• Sell a slingshot reversal off the high
• Sell with traps on the way back to the lows.