$ES #Monthly Opening Range
The first three trading days of each month sets so called Month Opening Range. The highest price reached during the first three trading days is considered the Monthly Resistance. The lowest price recorded during the first three trading days is recorded as the Monthly Support.
The February Monthly Opening range is 4,208.50 – 4,048.50.
You can read my blog post explaining that strategy here.
The upcoming 4th, 5th and 6 th trading days of February is a very important period of time because this is when both bull and bears normally attempt to break out of the Monthly Range.
I am looking for one of two scenarios explained below.
Scenario 1: Bearish Bulls manage to push price over the Monthly Resistance 4,208.50 but then drop the ball and let bears push ES back into the monthly range like it happened in May 2022:
A failed breakout always attracts fresh short sellers and quickly push price down to the Monthly support.
Remember this rule of thumb:
Nothing inspires bears to start a new trending move down more than a failure of bulls to break over an important resistance.
Scenario 2: Bullish Bears will test the Monthly Support 4,048.50 but will fail to break under it. This is how January 2023 started:
Note how bears tested the Monthly Support on the 4th and 5th trading days of January. They failed to break under support and that immediately attracted an army of aggressive momentum traders who quickly pushed ES up, first into the Monthly Resistance and then higher.
Remember this rule of thumb:
Nothing inspires bulls to start a new trending move up more than a failure of bears to break under an important support.
I would prefer the scenario 1 because it fits my wave count where bulls are allowed to push higher in a micro wave v up to complete a large corrective wave B up.
But let’s watch how it unfolds this coming week. The smartest strategy is to wait until either bulls or bears fail and then bet on a winning team.
P.S. The Yearly Opening Range strategy.
The first three trading weeks of each year sets so called Yearly Opening Range. The highest price reached during the first three trading weeks is considered the Yearly Resistance. The lowest price recorded during the first three trading weeks is recorded as the Yearly Support.
2023 Yearly Opening Range for ES-mini is 4,035.25 – 3,814.50.
Last weed ES spiked under the Yearly Resistance 4,035 but then bounced back and closed the week over.
If bears manage to crack that Yearly resistance-turned-support at 4,035 they will open a Pandora box, an opportunity to re-test the Yearly support at 3,814.50.