Morning Update for Subscribers
Is the Market Setting Up a Trap?
📈 Morning Update for Subscribers
🔹 Key Rebound Off Support – Is the Market Setting Up a Trap?
📌 Market Overview & Open Pivots
$ES Open Pivot: 5996
$NQ Open Pivot: 21291
After a relentless sell-off, buyers finally defended our key 5935/50 support zone and triggered a strong rally. The follow-through move after yesterday’s close back above 5975 confirms that the dip below was likely a headfake.
But before getting too bullish, remember—NQ is still down over 1000 points in just a few days. The market still favors selling into bounces, and we remain in a downtrend unless proven otherwise.
🔍 Key Observations From Price Action
✅ Market followed the plan: Yesterday, we pointed out that above 5950, we could start considering longs for a short-term bottom. That played out perfectly.
✅ Price action confirms the importance of 5975: The move below it was a fake breakdown. If we now close back above 5975 again today, it further confirms that move was a trap.
✅ Upside may still be limited: Even with this bounce, the bigger trend remains bearish as long as $ES stays below 6050 and $NQ below 21300.
🔑 Key Levels to Watch Today
🚀 Upside Potential – Can Buyers Sustain the Move?
✅ Minor resistance levels:
6015 ($ES) / 21405 ($NQ) → First test of resistance
6050 ($ES) → Major level to reclaim, remains untested
🔹 A break above 6050 could open the door for another squeeze, but we remain cautious below this level.
🔻 Downside Risks – Sellers Still in Control?
🔻 Critical support to watch:
5975 ($ES) / 21130 ($NQ) → "Rug pull" level—if we lose this zone, expect another strong wave of selling.
5950 ($ES) → Must hold to prevent another leg down.
🔹 If sellers regain control and push below 5975, it could trigger another liquidation move.
📚 Educational Insight: Recognizing Fake Breakdowns
Yesterday’s price action was a perfect example of a fake breakdown—where price drops below key support, triggers stops, and then reverses sharply back above.
🧐 How to Identify a Fake Breakdown:
1️⃣ Price quickly reclaims the broken level: If a key support (like 5975) breaks, but price closes back above it the same day or the next session, it’s a sign of a fake breakdown.
2️⃣ Stronger rally off the lows: After the breakdown, price doesn’t just bounce—it surges, trapping shorts.
3️⃣ Higher lows start forming: The market starts building structure with higher lows, showing buyers stepping in.
These setups are common in bear markets and range-bound conditions where liquidity hunts take out weak hands before moving in the opposite direction.
🔹 Pro Tip: Watching how price reacts at key inflection levels can help you avoid getting trapped and instead take advantage of these moves.
🎯 Trading Plan for Today
📍 Scenario 1: Push to 6015-6050, then stall
If price grinds higher into 6050 but struggles to break through, it signals a potential area to fade the move for shorts.
Targets: 6015 first, then 6050 rejection level.
Invalidation: A strong breakout above 6050 cancels short bias.
📍 Scenario 2: Reversal back under 5975 → Short setup
If price loses 5975 and holds below, it confirms sellers still have control.
Targets: 5950, then 5935 breakdown.
📍 Scenario 3: Consolidation between 5975-6050
If price chops between 5975-6050, expect range-bound conditions before the next major move.
🔥 Final Thoughts
The market confirmed our bias yesterday, bouncing from our key levels, but the overall trend is still bearish.
Today’s close is key—a close above 5975 confirms a failed breakdown, while another rejection there suggests more downside ahead.
Short-term traders can look for quick longs toward 6050, but be ready to switch back short if resistance holds.
🔹 Stay focused, manage risk, and let the market tell us the next move. Let’s execute! 🚀