Market Analysis for The Week of 2/22
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After the Friday the 13th fail at the critical 6898-6902 level, a weak close led to a failed rally on Sunday night into the Monday holiday session. By Tuesday premarket, the critical yearly and weekly level of 6801.5-6808.75 had already been tested. This specific range was used to represent the cash hours lows for the prior two weeks which were relatively equal and susceptible to a look below and fail (LBAF) for multiple reasons. After a nasty open and drive back to the level, we saw a LBAF the IB low trigger a LBAF of the weekly level. This was a weekly swing long setup. Once 6828.75-6832.75 was flipped back to support, the major target of 6898-6902 was hit by premarket Wednesday:
ES then struggled with the weekly LVN as expected for the rest of the week but closed on a strong note.
With the LBAF active all week, there were certainly day trade shorts to be had, but that kind of a swing long setup has to be back of mind all week. My preferred mthod of handling this is to take shorts against that swing long when indicated. This decreases PnL drawdown which can sometimes lead us to close a trade which is still valid. I call this “hedging the edge” and there is a video on it in the starter kit. Sellers didn’t completely roll over, technical damage remains (on NQ in particular), and both major indices closed right at a critical area. It is very likely that one side gets wrecked early next week. As we are each week, we will be prepared for whatever situation is presented.
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