ES Grinding Back to All-Time High 8/12/2020
ES at the 8 hour view.
The ES pulled back and revealed that's it's in a bigger ascending wedge now. Ascending wedges are usually bearish after they break. That said, liquidity levels are high enough to go surfing in.
What does this mean? It's going to be a slow grind up to the end of the wedge for the next week. The projected date for the wedge to break is August 17-19. That's also right around the time when the VIX breaks its updated wedge too. The ES will likely reach between 3390-3415 before pulling back again.
Now, I've been seeing a lot of permabears waiting for 3400 to begin their shorts. It would make sense. Bears are looking for a double top pattern. Unfortunately, as long as we do not close below the dashed green line, the trend is still up... begrudgingly. These same permabears are only seeing the trees and not the entire forest (big picture).
What's the most likely course of action? The ES grinds up to around 3400 or end of the ascending wedge. Permabears who have been patient would short of what they think is a double top pattern. High liquidity means there are way more buyers below than sellers above. ES may experience a "bigger" pullback, but will likely grind back up again. Where would the bears place their short stops? At the most obvious place. Where ever the previous high was (right above 3400). Once the ES comes back over 3400, we will see another short covering rally.
From there, we will see bears and people who sidelined scramble to go long out of FOMO.
I may sound bullish, but I'm actually quite displeased with this likely scenario. I love volatility as it provides opportunities in both directions. However, that doesn't change the reality of the situation. Trading is kind of like life. In life, you make the best with the cards that you're dealt with. You can curse all you want of how unfair it is, but it won't make your situation any better. In trading, you can curse of how ridiculous this rally has been (which it has) or trade with what you got. I'm going long until the current internal market data tells me otherwise.
The ES pulled back and revealed that's it's in a bigger ascending wedge now. Ascending wedges are usually bearish after they break. That said, liquidity levels are high enough to go surfing in.
What does this mean? It's going to be a slow grind up to the end of the wedge for the next week. The projected date for the wedge to break is August 17-19. That's also right around the time when the VIX breaks its updated wedge too. The ES will likely reach between 3390-3415 before pulling back again.
Now, I've been seeing a lot of permabears waiting for 3400 to begin their shorts. It would make sense. Bears are looking for a double top pattern. Unfortunately, as long as we do not close below the dashed green line, the trend is still up... begrudgingly. These same permabears are only seeing the trees and not the entire forest (big picture).
What's the most likely course of action? The ES grinds up to around 3400 or end of the ascending wedge. Permabears who have been patient would short of what they think is a double top pattern. High liquidity means there are way more buyers below than sellers above. ES may experience a "bigger" pullback, but will likely grind back up again. Where would the bears place their short stops? At the most obvious place. Where ever the previous high was (right above 3400). Once the ES comes back over 3400, we will see another short covering rally.
From there, we will see bears and people who sidelined scramble to go long out of FOMO.
I may sound bullish, but I'm actually quite displeased with this likely scenario. I love volatility as it provides opportunities in both directions. However, that doesn't change the reality of the situation. Trading is kind of like life. In life, you make the best with the cards that you're dealt with. You can curse all you want of how unfair it is, but it won't make your situation any better. In trading, you can curse of how ridiculous this rally has been (which it has) or trade with what you got. I'm going long until the current internal market data tells me otherwise.