Interesting view of ES! Monthly
As the world goes crazy, the financial markets show the scars of investor sentiment. From a very high level view its possible to make a few observations that might help keep us out of trouble.
This is the MONTHLY chart for ES. Following standard price action rules we can see that we have been in a RANGE since May of 2022. If you look back you can see that we had a straight UP trend from April of 2020 all the way to August of 2021. So when you compare the price action from 2020 -2021 to Jan 2022 till now, they look very different. It literally makes from Jan 2022 to Oct 2022 look like a pullback. It also clearly displays a buy side imbalance since Nov 2022.
When you draw the price channels in you can clearly see the downtrend from Jan 2022 and you can also see that as of Feb 2023 we will close outside of the down ward price channel. If we follow price action rules it is clear that we have a break in the channel and should expect a new lower extreme to be formed at some point so looking at longs for hardcore continuation should truly only be considered above 4200 and shorts below 3807...everything in the middle is noise.
This information helps us to see what the market is doing. For example, you wouldn't want to go long when at the top of the range because most breakouts fail initially. BUT...if downward momentum is in play, there is plenty of room to get bottom of the range to make some good moves. Longs however could be scary because we are very close to the top of that range which is highlighted in white.
The simplest trades will be ones that are fading the breakout in the range for a quick scalp of 2 to 3 points.. 2nd entry long only up till about 4200 and 2nd entry short down to bout 3820.
For continuation trades, if we hit 4200 with a bounce and a higher low, the next target would be around 4240.
BUT...following price action rules, since we have a break in a channel we should expect a new extreme to the down side to be set or test the last swing low around 3535.
This is the MONTHLY chart for ES. Following standard price action rules we can see that we have been in a RANGE since May of 2022. If you look back you can see that we had a straight UP trend from April of 2020 all the way to August of 2021. So when you compare the price action from 2020 -2021 to Jan 2022 till now, they look very different. It literally makes from Jan 2022 to Oct 2022 look like a pullback. It also clearly displays a buy side imbalance since Nov 2022.
When you draw the price channels in you can clearly see the downtrend from Jan 2022 and you can also see that as of Feb 2023 we will close outside of the down ward price channel. If we follow price action rules it is clear that we have a break in the channel and should expect a new lower extreme to be formed at some point so looking at longs for hardcore continuation should truly only be considered above 4200 and shorts below 3807...everything in the middle is noise.
This information helps us to see what the market is doing. For example, you wouldn't want to go long when at the top of the range because most breakouts fail initially. BUT...if downward momentum is in play, there is plenty of room to get bottom of the range to make some good moves. Longs however could be scary because we are very close to the top of that range which is highlighted in white.
The simplest trades will be ones that are fading the breakout in the range for a quick scalp of 2 to 3 points.. 2nd entry long only up till about 4200 and 2nd entry short down to bout 3820.
For continuation trades, if we hit 4200 with a bounce and a higher low, the next target would be around 4240.
BUT...following price action rules, since we have a break in a channel we should expect a new extreme to the down side to be set or test the last swing low around 3535.
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