After an anticipated drop and quick pop this week, now it’s time to observe what is setting up next. Whenever we approach the 2 to 3 average true range (ATR) bands, we can expect a pullback. Every downside move is simply just a dip buy, until proven otherwise. We’ve had diminished volume over the past few days, so the markets aren’t completely out of trouble, but where do we go from here?
To gauge where we are heading tomorrow, keep a close eye on the 4-hour Ichimoku Cloud and the hourly squeeze forming on the overall market – in the S&P 500 (ES). Use these squeezes to your advantage, so you can stay out of trouble on Friday, especially with big earnings coming up next week. As long as we hold this key zone at the point of control (POC) at 4,341, we will remain bullish. If the squeeze fires to the downside, we will be looking for a push back to the daily mean at 4,313.
Be patient and stay disciplined to end the week. We’ve seen a great drop, a great pop, and so we want to stay out of trouble as the market moves sideways and looks for direction. Watch the video above to see where I think the markets are heading next.
Stay Focused!