An ABC/CCI divergence is one of my favourite playbook reversal setups I use when the environment & conditions allows me to execute within my risk management rules for a potential 2R + (Reward to risk ratio).

This setup has a great potential and higher probability specially during rotational days.

Today we are in rollover week environment & markets are also waiting for FOMC rate decision later this week.

I am expecting a back and forth rotational kind of action on days like this.

I would look to trade both directions short/Long during these conditions when setups represent themselves to me.

Keep in mind I don’t go looking for setups, and force my opinion on the market to try to forecast & predict outcome.

I would wait for the market to show me the setup first, then I would execute it with confidence while managing risk with size.

Markets will always test a traders patience and limitations, and that’s where having the right mindset together with emotional awareness becomes crucial for consistency when it comes to trading in order to maintain, discipline, confidence stay focused on process rather than outcome.

I will be positing more on the importance of trading psychology & mindset in the near future. Stay tuned

The following 5 minutes S&P futures chart (ES) showing a combination of ABC setup together with CCI divergence , a potential of a momentum move up to test confluence zone of (prior swing high at 5686 + VWAP / 618 Fibonacci projected level) as a target.

First trade: is a short scalp trade covering at target /Higher Low.

Second trade: was based on 5 min ABC/CCI divergence setup discussed earlier. where I reversed my position and went long while watching order flow & smaller time frame for early entry with a very tight stop as market continued to move higher as anticipated on with a 2.5R+ reward to risk.

Here is a 30 seconds execution chart showing both trades executions for short & long setups.

Hope you find this trading example helpful, feel free to post any questions of comments below.

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Best,

Gus Joury