4/19 Trade Plan
Hello and welcome to another installment of my daily e-mini trade plan. For any new readers, welcome! In this newsletter I discuss levels, scenarios and market analysis for the S&P500 market.
During the overnight session, the index floated up to 4200 and we were set to open the day on a gap higher. Due to the structure of the overnight auction, I thought it plausible we could see a inventory correction down into support at 4180/70 and I sent the following message
Let me explain my reasoning for this. Dalton talks about the concept of “inventory correction”. I do not have the data to back up his claims, but Dalton claims that roughly 70% of the time when we see a linear move like this during the pre-market, we often see a “correction” to inventory retracing the move.
And 4180/70 was the chosen target area because 4180 is the macro support/resistance level as well as the “launch” zone for this rally. Furthermore, an IB close back below this level in my book would solidify a “break above and fail” scenario.
The first bit of this plan played out well, we opened and saw an instant rejection to the downside, but selling began to shut off near previous VAH. After the IB close below 4180, buyers were unable to re-take this level for the rest of the day, showing the effectiveness of this level.
Keep reading with a 7-day free trial
Subscribe to Equity Pulse to keep reading this post and get 7 days of free access to the full post archives.