4 Ways to Trade this ‘Snap Back’ Reversal

(Video length 00:47:53)

Are you seeing this ‘Snap Back’ Reversal?

We had big moves on low volume over the holiday break, which sets up perfectly for this week’s “Snap Back” reversal trade…

But before you go chasing the market higher, make sure you have these (4) four price-action setups on your radar for Wednesday…

E-Mini S&P (ES):

E-Mini Keys to Success:

• Big Move today often means a range coming tomorrow
• Bears took price lower at the open this morning, but buyers stepped-in with a reversal off the previous all-time high and price appears to be hunting for a retest of today’s high.
• With bulls in control of the trend, I’m looking to buy pullbacks and bear-traps as the market tries to complete the move back to the highs.
• Sellers don’t have any momentum, so they need to wait for exhaustion at the highs or a reversal going lower.

Top 3 Trades for Tomorrow: 

• UP – Buy the bear-traps (or) sell the 2-try failure off the highs
• DOWN – buy the seller failure (or) sell the 123-Reversal
• SIDEWAYS – wait for the new range, then buy support levels below it.

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• Big moves on the chart today often mean small ranges tomorrow
• Bulls took control at the beginning, and even after sellers grabbed control mid-day, buyers were able to snap back to the highs after buyers entered on the deep pullback.
• Buyers have the momentum, so I’ll be looking to buy pullbacks at support levels and jump in with bear-traps if price shoots higher.
• Sellers don’t have much to work with (yet); they need an exhaustion reversal off the high, or a 123-Reversal running lower.

Top 3 Trades for Tomorrow: 

• UP – buy the bear-trap (or) sell the 2try reversal
• DOWN – buy the seller failure (or) sell the 123-Reversal
• SIDEWAYS – avoid the range, buy at support levels below it with seller failures.

---

Gold Futures (GC):

Gold Keys to Success:

• Another big move day, anticipate a narrow range tomorrow
• Buyers took control early with a Spike & Range, but this strong move lower gives sellers all the momentum as they try to go back into the range from last week down at 1778.5.

Top 3 Trades for Tomorrow: 

• UP – buy the bear-trap (or) sell the buyer failure
• DOWN – buy the seller failure (or) sell the bull-trap
• SIDEWAYS – sit on hands for the new range, sell resistance above it.