After today there is very little doubt that we have a weekly lower high. We have been prepared for it for 2 weeks ever since the poor low from the first week of October. We were watching 4419-24 and 4435-40 on ES as the most likely area, and yesterday’s high was 4423.25 (we trading up to 4430.50 last week outside of regular trading hours). A lower low now seems all but a certainty, but the question is: How much lower?
Into today I was bearish unless we traded above 4378.5. The levels we used were as follows: “Levels (and supply in general) I’m watching for 10/19 high to low: 4403, 4392, 4384.5, 4378.5, 4366.25 4351.5-4355.25, 4343, 4330.75 4320-24, 4315, 4304-4308, 4297.5.”
Our morning short setup played out perfectly: “If we trade above the 4343 spike base but fail by 4351.5-4355.25 I will look for shorts for a continuation trade lower targeting 4320-24, wary of 4343 holding again. However, I believe that in this instance failing 4351.5-4355.25 would lead to a loss of 4343.”
We failed at 4352.25 at the open and hit our target of 4320-24 (4322.25 low of day prior to FOMC). In the chat we flattened shorts here ahead of JPOW.
During JPOW, the vol crush ramp took us precisely to our 4366.25 level (4366.5 high of day) which was just under the supply range outlined. From here we sold directly to our 4315 level (to the tick). We rallied again on the post event crush, where we failed at the 5 minute re-offer setup called out in live chat. From here it was game over, and after losing SPX 4300 we traded to our last target of the day 4297.5 (scenario also provided in chat).
Here’s a before and after of last night’s SPX picture to show the reaction today just under supply.
So what will happen tomorrow?