Entering Short Term Sideway Market

The market is currently in retracement. However, the afternoon drop of ES is not severe enough to break the current uptrend.

So the question becomes, when is a good time to re-enter a long position.

I expect the retracement to last 1-2 days. For tomorrow, ES can either continue to go down, or be in a very choppy mood.

This means I would like to go long in the low 740 level, and expect an uptrend continuation on Wednesday or Thursday.

Despite the market will look like it is going down again tomorrow, this is exactly the wrong time to enter a longer term short postion. Trades for tomorrow should either be scalping nature, or for building up a long position. I will believe downtrend resumes only if ES breaks below the 730 level.

As for trading, the lower high created on Friday was once again broken on Monday before market open. In this situation, it is quite clear the market is unlikely to start retracing until later in the day. Thus, I cut my short position.

On the other hand, the market is severely overbought and it is quite clear a correction is just around the corner. The question is when.

I made the decision to short ES again at a much better price and ride most of the intraday retrace. The entry price is very much based on "scalper instinct" and it is hard to describe in words how I arrive to the conclusion.

Today's trading summary:

1. Stop loss on the March ES short entered last Friday (-7 points).
2. Scalping.
3. Short June ES contract at 770, covered at 754 (+16 points).

Position: None.