May 24, 2021

Is it Too Early to Short this Breakout?

Am I crazy for looking to short this breakout?

I know – the market is certainly bullish, and I’ll be looking for ways to buy pullbacks at support levels tomorrow morning…

But did you see the overshoot above the range on the Eminis?

The failed rotation on the Gold?

I’d love to get short off these highs, AND long off the lows, and I have some great price-action setups to help us time the entries. Let me show you…

Strong “runaway market” for the bulls today, which didn’t stop until they reached the round number at 4200.
Anytime we see such a big move in one day, the following day is likely a range, so I’ll be watching to see it develop overnight.
If this market continues to trend higher, buyers will be buying pullbacks.
If this market turns sideways into a range, then buyers will focus on buying breakout failures at support levels below the range.
Sellers don’t have any momentum so they need to wait for a reversal to get momentum moving back lower again.

Best Trades for Tomorrow:

Strong run higher completes a large measured-move and appears to be showing signs of a trading-range going into the overnight session.
If we keep trending higher, buyers will be looking for pullbacks
If we start trading sideways, buyers will be looking for entries below the range.
Sellers need to stay patient because the momentum is firmly in the hands of the bulls.

Best Trades for Tomorrow:

Bullish into a range, but with buyers struggling to rotate higher, we should expect a strong run lower to take out the lows before another try going higher, or a reversal going lower.
Sellers will be looking to capitalize on this opportunity, selling failures off the highs and breakouts going lower.
Buyers have to be careful on the next pullback because sellers will have all the momentum

Best Trades for Tomorrow: