ES Broke the 3 Week Coil Yesterday, Smack Dap into Resistance

Will it continue?

ES has done the same thing 3 weeks in a row.
(Scroll to bottom for ADHD readers:-)

Really something remarkable and should be noticed by any serious trader. But it wasn’t just the gap down, fill, and dump that was notice. It was the way price reacted during the week once it filled and rallied.

The best way I can explain this is by offering an answer to a question I received requesting my thoughts on ES and NQ for next week.

Here’s the question:

PriceTrader

whatcha think about ES/NQ into next week? i've got 7dte runners left ES 6200C and NQ 22000

The above question explains that writer has 6200 ES calls set to expire Feb 21. DTE (Days Till Expiration)

Here was my response:

I really try not to predict where the market is going rather, I prefer to react. But we can look to what is expected and the general lean, knowing that the way we trade may be completely different.

When I look at the ES there are some undeniable facts:

#1 The last 3 weeks have been rinse and repeat. Gap down, rally up to fill gap and test upper bound...dump on Friday... gap Sunday...resume.... This note from Tuesday sums up my thoughts intraweek:

---- These Sunday drops and reclaims are working like clockwork too. 3 in a row. Caught the last two and where do they pause? 66? Where do they start? 5935/5945/6014and today 6020.... They end 6140/6120/6100. The coil is obvious... Next big move is a trend leg----

#2. The note above suggest higher lows and lower highs and the consolidation breakout expected. Most consolidations are continuation patterns of overall trend. We got that leg yesterday, and we nailed the low of 6054. with multiple targets to 6135 and have runners

#3. 6066 has been the magnet for SO MANY DAYS I really feel tired talking about it with other traders, but that's what happens during consolidation and break.

#4 6143 was my level for major resistance and after such a move yesterday, less a Trump tape bomb, we prolly chop rest of day between 6115 and 6145.

#5 We are in a definitive daily uptrend since January 13th when we tried (and failed) to break Nov 4-Nov 5 5836-5784... therefore it's tough to do anything but long if it's going to last more than a few hours.

#6 If I were to "project" into next week (remember we have a holiday Monday), I'd be looking at something like a 3 hr chart using Feb 13 4AM open (launch point) to the Feb 13 7PM close (first candle before next candle has lower close) and project using Fib extensions. It's one of the the reasons I bought 6200 9DTE Tuesday (anticipating resistance at last nights night). 6207 is a 100% projection on the Fibs, after a coil, a breakout, and momentum follow thru.

#7 There's ATH just above, but there's multiple levels to get thru before that. There's also headline risk over the weekend.

#8 Most trends continue

#9 We're overextended and into resistance, and a pullback is likely

#10 All things considered I think we continue the trend, but WE WILL have pullbacks along the way. I think we're going to get one soon. If it wasn't Friday, I'd say within the next 36 trading hours.

I'd be willing to add to my 6054 runner if we break below 6093, maybe to 87 and take back 95 or so... But I 100% wouldn't do this on a tape bomb. 6020 is prolly the only area I'd blindly bid without seeing price acceptance.

That's the thing about ES, we just don't know.

But, the setups are usually the same. I have the same 6200's purchased Tuesday for $3 and sold for $6 and $8.50 yesterday. It’s now guaranteed profit regardless of price.

IDK whether they'll print or not EOW next week.

Hope this helps... It's the best I can do without a crystal ball

This was an exchange today after actively trading ES all week and into this morning. After buying Sunday, and then again Thursday, one thing that is incredibly important.

We should always leave a runner.

ES, by nature, elevators down seeking liquidity, and relentlessly squeezes back up taking short-sellers out.

Along the way support and resistance levels flip flop, consolidation patterns emerge, and retail gets caught chasing.

For us, we need to take profits when they are due. We manage the trade the same way, level to level, with majority of profits coming off at T1. More on this later.

The key is….always leaving a runner. It allows us to capture upside, reduce fomo, and scale back in on a nominal basis to reduce risk.

For example, my purchase of 6054.25 Thursday morning at 4:15AM…
T1 was 6064 (60%)
T2 was 6069.50 (10%)
T3 was 6088 (20%)

And I left runners.

This does many things.

#1 It ensures I’m profitable on majority of trades, regardless of price action
- After hitting T1, we guarantee a profit based on our risk rules. We need to ask ourselves what’s better: Home runs every 5% of at bats, or consistent hits above 60%. For me, this is an easy answer

#2 It ensures I capture upside if there’s more
Bought at 6054… Did I know price was going to 6069.50 or 6088? Of course not. But that’s where the levels were suggesting price could turn there if it wanted to.

It didn’t which leads me to

#3 It reduces FOMO
I have no urge to buy blindly into this rally knowing I have a position. Many traders succumb to the emotion of FOMO. Having a position in nearly every big move reduces that emotion and allows me to trade mechanically.

Yes, it’s not a full position.
But I am participating in every move (hopefulyl)
I am making money
We are green.

As I type price is at 6134.50.
Meaning I have a long on ES, with 80 points profit on the runner.

I have no idea which way price is going, but I can add to this if a setup occurs.

If a setup doesn’t occur and we continue, I simply collect upside. There’s so many important things above. But, if I had to select just a few and break down the main points they would be:

#1 Most trends continue
#2 ES broke out of it’s continuation pattern and is likely to have short term pullback after hitting multi-week resistance. A pullback of 100-150 points could be considered a healthy one in an overall uptrend.
#3 6098 is an area of interest to add but only if reclaimed
#4 Let runner’s run

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These are some of the things we can expect to know about before hand upon issuance of ES Daily.

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