Shorting has become a popular topic of discussion as of late. The truth is, in terms of path of least resistance uptrends can be difficult to short.
We define an uptrend as a weekly chart trading above the 21 exponential moving average (EMA) with positively stacked EMA’s.
If you look at the S&P 500 (ES), we’ve been in an uptrend since 2020 because there was no point it traded below the weekly 21 EMA. It’s the same case for the Nasdaq (QQQ) since April 2020.
Realistically, when the market drops from +2 to +3 average true ranges (ATR) down to the 21 EMA on a daily chart, all that’s happening is we are pulling back to weekly support followed by a common theme of ripping up to all-time highs.
Shorting an uptrend can be challenging, and it depends on position sizing, risk management, and the choice of strategy. Watch the video above as we discuss the overall trend, key setups, and where we want to add to our current positions.
Stay Focused!