(click the image to enlarge chart)
Friday’s OpEx brought selling. The break of the first blue minor trendline at 1199 was the first potential day trader entry for disciplined countertrend traders who wait for confirmations (those are the guys I am keeping an eye on). The gap below at 1192.75 was filled, then the stops under the most recent VST buy signal at 1185 were taken and we saw a small bounce back up to back kiss the gap fill at 1192.75.
This morning, a touch of the blue trendline support has brought that 1185 number back into play. Old support becomes new resistance, and so that would appear to be the line in play today—VST bearish below and bullish above.
On the upside, there is a new gap at 1189.75. Next comes the 1197 – 1199 area where the downside break occurred, and then finally, the tentative trident bear channel top rail, which acts as an absolute stop for professional countertrend bears using trailing stop protection.
On the downside, price action below 1185 brings into focus the VST bull stops under the blue trendline and then the Stops and Targets primary trend line just below at 1178.25 area.
If that primary trend line were to be taken out and held, then the next target lower is the yellow rectangle, which represents pivot support between 1171-1173. Under there and bears will have established a lower low after a trendline break.
Hard to read anything significant into an OpEx volatility move, but the coming days should give some clues as to whether a tradable pullback might be at hand after the VST trend channel was broken.
On a snapback rally from the blue trendline that exceeds the gap fill at 1189.75, the next upside target could be the trendline break at 1199. That is where a countertrend pro likely would have entered on Friday anticipating a reversal and eventual break of support–and so is a good point to watch, with the descending bearish trident channel being the absolute countertrend bear backstop.
ES 1185 is the VST line to watch today, as that would have been the obvious cover target for a break from 1199 (after the stop run). A move back below there, would put the countertrend bears back into VST control—whereas price action above constitutes a reversal from that number, with the countertrend bear stops potentially being in the sights of the pros.
All primary trends remain up above 1178.25.