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With a fill of 1392.50, the FOMC trap has now played out and the 1356.75 to 1392.50 gap range worked like a charm.
After a little uncertainty at the gap fill area where profit-taking occurred, we saw a pullback to just above old resistance at 1386.25 and now we are seeing a squeeze as the pros push into a resistance void to force bears who shorted the FOMC range to cover.
This might be a good time to re-read what I wrote in my April 18th post. This is the push to a new structural high I was talking about–and it is impossible to know at this point whether it is going to be an eventual breakout of the spotter high at 1419.75–or if it will instead be a lower high (less than 1419.75) to set the channel slope for a bearish trending structure–after most are on the bullish side of the boat.
What we do know is that 1352.50 is the key bull/bear line and that the ‘right’ VST/ST/IT trade here is long from near that line (the gap fill at 1356.75 was an excellent entry spot) and now the best bet is just pushing up the profit stops behind that trade to see where this squeeze goes.
The pros love to use trident channels in this type of scenario, so I have drawn in a light green VST channel that has the rising top rail presently at about the 1405/1406 area. We’ll see what happens if/when price gets there.
ES 1356.75 to 1392.50 was a very good setup and that trade is now in the ‘bonus’ area.
…my .02
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