ES Dec Short Short

You always hear "Don't fight the Fed". I agree with that, however, pull backs do occur. Just look at the 4 hour ES S&P 500 December futures chart above for proof. This post is titled "Short Short" because this trade will attempt to fight the Fed and may not last 24 hours.

Since this is a high risk trade, we want to use as small a position as possible, then scale in with more contracts later as the trade continues in our favor. So, I'm just using 1 micro ES contract with Symbol MES to start. The ES point value is $50 while the MES point value is $5.

The notes on the chart show an AB/CD pattern and a 78.6% Fibonacci retracement as 2 sources of possible coincident resistance. These can be combined by simply saying its a Gartley pattern.

In addition to the Gartley, there is also a possible Negative Stochastics Divergence.

These are sufficient to look for a reversal here, but there's more. If you look left, you'll see previous rejections of this price level on 9/27/21, 9/15/21, 9/14/21, and 9/13/21. Before that, this level acted as support on 9/9/21. Off the screenshot above, there's also resistance on 8/24/21 and 8/25/21.

I expect we may get some higher highs overnight. If so we'll have to correct the Gartley D point in the morning, which will change the Target value. But for now, the Target will be .618AD, which is 4479.75 - .618(4479.75 - 4260) = 4344. We'll use a Stop of about 20 points, specifically 4500.50.

Summary:

Enter: 4471.00

Stop: 4500.50

Initial Target: 4344.00

Risk: 4471-4500.5=29.5

Reward: 4471-4344=127

R:R = 127/29.5 = 4.3:1 which is excellent!