Over the weekend ES got slammed with Iran War headlines. While geopolitical events like this might sound like they are complicated to trade or “bearish” or uncertain, readers of this newsletter knowthis is not the case at all. ES just repeats the same cycles over and over. It virtually never changes, which is why I like trading it. ES never surprises.

These cycles prey on retail psychology and allow institutions to seek the liquidity they need to fill their orders in predictable ways. Once you understand these cycles, you can exploit them as well. One of those cycles is ES goes elevator down in a vertical flush cutting through every support. Then, it flushes a big low, traps shorts, recovers, and price rips. This flush of a big low, trap, and recover refers to my core setup: The Failed Breakdown. After geopolitical events in particular, this cycle always occurs. If the geopolitical event occurs over the weekend, the cycle will typically begin with a gap down open.

Readers were well prepared. I warned on Friday at 4pm (before the War even started): “I will note there is possible geopolitical headline risk over the weekend (Iran). IF it transpires, it will mean a 40-100 point gap down. As always, the gap down will result in a Failed Breakdown/squeeze but I would not hold any size over the weekend.” This was highly prescient, and on early Saturday morning, this risk materialized and we gapped down Sunday 45 points.

Like all gap downs/elevator down sells in ES though, this did not take long to see a Failed Breakdown and rip. I wrote on Friday at 4pm: “6782 is under there and instead of buying this, wait for it to hold and recover the 6791 February 17th major low.” Overnight we swept that 6791 low down to 6768, trapped bears, and ripped over 150 Points into today.

Is the bottom already in? In today’s newsletter I’ll talk this, I’ll go over today’s Failed Breakdowns (these are key to know), and I’ll discuss the actionable plan for tomorrow.