$ES #Daily #trading setup #macro
The rally off the October low started from a huge intraday bullish reversal (see the green circle on the chart below):
On Tuesday morning ES-mini spiked over the previous high but got brutally faded leaving behind a long wick, a sign that price finally reached an area where a lot of bears are willing to sell and short.
We can see that the inverted hammer bearish candle is of equal size to the hammer bullish candle at the October bottom.
However, the October reversal was more powerful because it was so called 2-close reversal when price made a new lower low but managed to close over close prices of two preceding days.
To turn this decline into a powerful 2-close bearish reversal bears need to close a trading day tomorrow under the Friday close = 3,968.
I would like to show you an alternative bullish scenario.
If price drops to 3,955 or even undershoots 3,945 but then recovers 3,955 that would trigger a long “failed breakdown” setup.
In that case the red -a- down,. -b- up, -c- down structure, a flat consolidation at the highs made by the last move up would be counted as subwave (b) down of wave (iii) up and would allow bulls to start another strong leg up.
Tomorrow we have FOMC decision on a rate hike scheduled at 2-00 PM EST and a press conference of the chairman at 2-30 PM EST.
Therfore we can expect crazy volatility in the afternoon.
The best what you can do is to refrain from trading tomorrow.
Those spikes during CPI, NFP and FOMC are barely predictable.