How the ES Bulls Turned a Breakdown Into a Breakout (Live Example)

Okay, so heading into the day, we were looking very bullish here. So let’s just take it from the top. We had a bullish inside day yesterday coming off that Friday failure wick. Okay, so what did we do this morning? We opened up right here at 6789, and the entire pre market run up was rallying pretty hard. We came up here, swept these all time highs, and then price ran out of buyers and rotated all the way back down, taking out the prior day’s low and Friday’s low. It looks like we’re going to close here just a decent amount below the prior day’s low.

So let’s dive down to the hourly and take a look at this intraday. Here we have a few key levels we were watching today. We were looking at a potential pullback to 6797. We were also watching this POC here, the 6774 level, and possibly all the way down to 6767 again — that prior week’s POC.

As we came up pre market, we formed a near bearish shooter candle — no trapped traders at the top. But then the cash session opened and immediately started to plunge for the next couple of hours or so. Price came down through here — here’s the closing bell — so we’re going to close a little bit below. We’ll see how it settles, but let’s take a look at the breakdown around the 10:00 hour. Shortly after 10, price broke down through here.

This is a range chart, not a 10  or 20 minute chart. The breakdown was fast and sharp, with accelerating delta to the downside. Then we saw a weak bounce here — a kind of dead cat bounce. Right through here, some bulls tried to fight back a little — a few more bulls, a few more bulls — and then suddenly a big block of buyers came in here, only to get completely run over. Price flipped and started selling aggressively, failing to retest the upper levels. A sell stop went into play right here — short this all the way down to target one.

That was the trade at 6754. Going into the day, I was looking for a failed breakdown like yesterday’s, which worked out really nicely. But today, we didn’t get a failed breakdown — we got an actual one. A clean breakdown, close through, and weak pullback that failed, trapped buyers, and sent price straight down.

Heading into tomorrow, we’re looking for one of two things. There are two scenarios to play off this setup. We’ve got a bearish outside day that closed below, and days like this — especially after taking highs — tend to continue to the downside. Where we go next, we’ll check that out tomorrow.

Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm funded traders every day, click the link below the video and hop aboard. We’re looking forward to trading with you.