Dissecting ES: Shorting at Structure or Breakout?

ES

As of now, what we know is Friday's rally fizzled out into the afternoon session and was close to retest the low. This suggest the bears are still around to battle with the bulls for the bullish structure between 2420.5 to 2404. What is conclusive is that the uptrend has been broken and attempts to rally failed at 2440, which is now a bearish level. As long as this level is not retaken by buyers, there are more downside risks. In Part I, i mentioned of a long potential at 2375 (Daily Cypher) after this selloff bottom out. This is part of my plan to trade ES. Speaking of which, could the market selloff to that level? I'd leave that in your hands. 

The second trade I missed was the late morning retracement back to test 2440. (You can find this in my previous blog, Dissecting ES Part II.) Back to the present, ES is now entrenched between a major support structure and important resistance level at 2440. Frankly, i do not wish to trade on the long side as there are not enough confluence of factors that i should go long. When i view my trades in risk to reward fashion, i could quickly decide that any trades i am taking now will be short term and do not expect big risk to reward if I'm trading it. I'd wait for price action to trade to 2436 to 2444 where i could have at least a 1:1 risk to reward.

Another trade i will envision is a breakout trade on Fri's low at 2419.75. It could mean a test on 2404, which if broken will be bearish. For my experiences on breakout, i would think if the breakout is within a support structure, there is only lesser then 50% chance of it working. So if you are going to trade it, I recommend taking the trade on 15 min chart where you could manage the trade better. I'd then take a 2 ATR risk against a 2 ATR reward upon entry (Depending on your trade size and max losses permitted).

Whatever you are going to do, consider it from a risk to reward perspective and work your plan out. I might not be right all the time, but if I keep your risk controlled it will keep my trading career alive till the next boat out. Good luck and have fun!