Times Are Changing

When it comes to trading the financial markets I draw a general line between easy times and difficult times. And I think everyone here would agree that the past few weeks, and by extension the past few months, most definitely fall into the latter category. Why is that? I could bore you with an exhaustive technical analysis drilling deep into the various characteristics of a transitory market phase, but there’s a much easier way to drive home this point:

Simply stated many of our most promising looking campaigns recently were sent to the woodshed just a session or two later. We all have been enjoying a perpetual bull market almost uninterrupted for the past nine years. And looking at that daily panel it increasingly looks like that we are nearing the end.

Which of course doesn’t mean the bulls won’t be able to drag the cart out of the mud this time. But the technical damage that has been inflicted already will leave a long lasting mark affecting market psychology going forward. And add the newly appointed Jerome ‘Kryptonite’ Powell into the mix and we are looking at the potential for more damage over the course of this year.

The bulls are now officially on notice now and have less than 40 handles to get their act together by turning the tide and forcing the bears back into hibernation. If they fail and we drop through ES 2650 we may quickly find ourselves at 2550 or even lower.

The crypto space has increasingly fall on hard times and the specter of intra-day volatility continues to rear its ugly head. Once again we are looking at what by all intents and purposes would have been yet another break-out entry opportunity just a few months ago.

Sellers however quickly stepped in which is additional evidence that more experienced traders have now entered the space who are financially capable of banging the tape back to previous inflection points. That, judging by this chart, applies both to the long and short side.

Even the effervescent Euro has hit a snag and although I still believe that the odds support a breakout higher it’s clear that easy times are over at least for now.

What Does It All Mean?

Which for us means that break out and trend entry systems for now are off the table. The odds are simply too high that we will be shaken out unless we place our stops all the way back into the next county. Moving forward I will primarily look for entries near previously tested inflection points.

Which is the hidden positive in all this nuttiness we had to endure over the past months: All those wiggles and giggles have produced quite a bit of technical context we ought to be able to leverage. Which means range trading also is now back on the map and should be pursued effectively.

Win/Loss rates in ranges are usually favorable, so I you might want to shifting your psychology. Don’t be an idiot and keep betting on a wipe out lower – that’s the least probable scenario until we see more bearish evidence. Or in other words: don’t shoot your load prematurely 😉