Weekly Outlook & Review
Good afternoon folks,
I hope you had a great trading week. It was choppy for the first half of the week, and the second half had two powerful directional moves, wiping out longs and shorts on both sides.
I highlighted 4300 as the key level last week, and we only came within 40 points of it. Bulls refused to give up any ground. On Thursday, the drop turned out to be a bear trap, and we rallied much higher, filling out the “megaphone” pattern that had been forming all week.
Outlook for Next Week
I trade the S&P 500 index daily and use supply/demand levels as my main strategy. I focus on a handful of core setups within these levels (found here) which typically appear 1-3 times a day. I take one or two trades a day, targeting gains of 10-30 points. My objective is to maintain consistency and leverage it, rather than trying to get as many points as possible.
Price action is looking awkward on both sides. The megaphone pattern does not happen often, especially on the daily chart. I’ve looked back at data in the S&P 500, and the most similar event I can find was exactly two years ago, in November 2020. The circumstances were obviously different (presidential election), but the price action resembles the action of the last two weeks:
Now:
Seasonality-wise, it aligns perfectly. It’s almost at the exact same time of the year. In both cases, we had a 300+ point rally in a few days, followed by an extended period of chop. After we broke this consolidation in 2020, we slowly grinded higher for the rest of the year. Not necessarily a prediction of future events, but something interesting to note.
The key level for next week is 4340. If we stay above 4340, we can see more rallying/consolidation for next week. If we drop to 4340 and break below it, it’s very likely we see 4300 and under.
Chart:
This is not a precise prediction, just a general outlook of where price action could go next.
That’s all for this week’s outlook. All of this will be updated and executed in real-time in The High-Roller Room. Stay sharp.
- T
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