S&P Futures (ES) VST Update

(click image to enlarge)

The expected consolidation zone between the previous high at 1128.50 (dotted magenta line in image above) and the top rail of the rising VST trend channel (dark green trend line currently at about 1133) has defined price action since the previous post.

The short-term trendline (dashed black line in image above) defines the critical support area and is located very near the current Stops and Targets ST stop/reversal line at 1113.25.

Those two trend lines (VST trend channel top rail and ST support) define the bullish and bearish boundaries (in my opinion).  Bulls would like to see a break and hold above that top rail to solidify a trend channel breakout–and bears would need to achieve a breakdown below the rising ST support line before looking for deeper pullback prospects.

Patience is the key here and it would likely take a breakdown of the dashed black trendline to generate sufficient selling to propel bears into control—as the trailing stops for many bulls are likely resting under that trendline (currently under 1113.25).

If sufficient numbers of bears continue to sell the futures short in this consolidation zone, then the parties on the other side of that transaction may be compelled to push the futures higher to create a selling opportunity to offload those acquired holdings (as the bears with tight stops are forced to buy to cover).  In the absence of selling pressure brought about by the triggering of protective stops, that short/cover cycle can continue unabated so long as sufficient numbers of individuals are willing to try a low odds top-pick play.

All trends remain up > 1113.25 and that line remains the critical divisor between bullish and bearish control going forward.  If consolidation continues, that ST support trendline will continue to inch up closer to price and eventually will determine the location where a new ST position can be established.  Bulls have profits locked in here in all three timeframes and remain in control of the macro trend above that line