WHEN BOTS BREAK & REVERSE

The BOTs were set early this morning as the Euro Zone market was ending and pre-open for the US market.  The options to consider:

• It will act as support or resistance, forcing price back into the zone.
• It will break or fail.  Look for a trend if there is a break. If it fails, price reversing through a BOT is an aggressive entry contra to the BOT, but in the direction of the reversal.
• Reversals, after price has moved away from the BOT, are considered strong plays.

TODAY:  ES & 6E

click to enlarge

The ES broke the 1335 key level last evening, but had a "light" test of that level as support.  Most areas of significance will see a re-test to confirm the level, then resume the dominant direction.

This A.M. price consolidated just below the long BOT, then ran through the short.  Generally, the first test is a failure (today pre-open and b3-4) and we avoid, or take expecting a failure.  The second attempt  is better and we see it was successful  b6-12.

1335 was a key support, and the next play was simply a play on that support.  Hindsight, it was a valid judgement, and a larger stop could have been used to run an order until the end of the day.

The bullish TL is a preferred play as is the reversal back through the short BOT.

The 6E saw the short BOT fail early in pre-open, consolidate, and reverse the short BOT for long considerations at the EMA+.

The short BOT failed again, and the EMA served as a resistance level for the first half of the day.

As with the ES, the expected move was to run higher after mid day, reaching the A.M. zone.