$ES #short trading setup #broken bearish wedge #Month Opening Range
Tomorrow we will start a volatile week packed with news catalysts including CPI scheduled on Tuesday, FOMC decision and a press-conference by Jerome Powell on Wednesday, and, finally, PMI on Friday morning.
In addition , that will be an OPEX week.
What will make things worse is that that Friday will be Quadwitching. Quadruple witching refers to the simultaneous expiration of stock index futures, stock index options, stock options, and single stock futures derivatives contracts four times a year. As a result we can get a very volatile trading week.
Last week ES-mini dropped under the lower trendline that formed an ascending bearish wedge:
I counted the move up off the Oct 2022 low as a corrective (a)-(b)-(c) up bounce that managed to retrace 76.4% of the preceding decline.
Because that move up had a three wave up structure, made a lower high and was shaped as a bearish wedge I counted it as a temporary bounce in wave B up.
A bounce in wave B up is supposed to be followed by either a three wave or a five wave decline targeting a new lower low.
Let’s zoom-in to 30 min chart:
Last week ES completed a corrective a-b-c up whipsaw, a subwave -b- up of wave -iii- down. That was a clean bearish setup for bears to start a new impulsive leg down, the strongest part of the decline, in subwave -c- of wave -iii- down.
On Thursday I noted that a new higher made on Friday morning can trigger a bearish reversal according to the “Minus 3 Plus 2” short setup. ES played our that reversal script nicely. It made a new higher high pre-market on Friday but closed at the lows of the day.
As long as bears hold ES under the broken Monthly Support (4,006.75), they will be able to keep pushing ES-mini down at last into the mid December.
Target 1 = 3,850.
Target 2 = 3,785.
Target 3 = 3,720.
You can use my free TradingView indicator that calculates the Monthly Support and Resistance levels based on the Month Opening Range.