Anticipating A Day Trade
I always like to be anticipating a day trade. Usually, anticipating a day trade is easiest early in the US morning session. It is a major reason to create a game plan the night before. In last night’s post, I indicated that the S&Ps (ES) were likely oversold by yesterday’s strong downside action. We could therefore anticipate a rally or pullback. I marked the 2113 level as a good target, based on market structure. I was hoping the market would get a little more oversold by going underneath yesterday’s low this morning, but the markets don’t usually comply exactly with my wishes. That’s really no matter.
Anticipating A Day Trade: The Context
Coming into the US morning session, the first thing to notice was that the S&Ps had moved up off the lows of yesterday. The idea of buying a weak dip underneath yesterday’s low for the first trade of the day was immediately nixed.
Two other things were noteworthy: First, there was little supply seen on reactions since the lows were made yesterday. Second, the market made a higher high (B) over yesterday afternoon’s swing high (A). In the backdrop of being oversold, this context suggested higher prices this morning.
Anticipating a Day trade: The Setup & Exit
The reaction back to C drew downside volume, but the volume didn’t produce a new low. Instead, price held the demand line and gave clear price bar behavior it would rally. A few minutes later, it tested the trend line and drew no supply with more confirming bullish price action. Either location offered long trade initiation.
As anticipated last night, the 2113 level was a reasonable target for a nice day trade.