ES Update

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ES has rallied from the range bottom touch at 1111.25 back up to resistance at 1159.25 for another 48 point trade within the range.

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Today I want to talk a little more about ‘structure’ from the bottom spotter signal at 1077. I have explained in previous posts what was needed to build the proper environment for a reversal/breakout-breakdown setup from the confirmed spotter low.

On the hourly chart above I have drawn in blue zig zag lines to illustrate a second way of describing the VST structure within the range–to be viewed along with VST trendline support and resistance…

You can see a series of two higher lows and a higher high and that describes the classical definition of a bullish sequence (higher highs and higher lows). This morning ES is challenging S&T resistance at 1159.25 and if that can be overcome–the next target higher would be VST trendline resistance, presently at about 1177, with the gap at 1180 just above.

So let’s put this all together here…

1) The three primary trends are all pushing down below 1196
2) The current S&T trading range is 1111.25 to 1198.50
3) We have a contracting VST triangle inside of that trading range
4) A confirmed bottom spotter is in place at 1077
5) We have a series of higher highs/higher lows within the trading range.

This market appears to be coiling for a big move. For bulls, the countertrend reversal hopes remain alive so long as the last higher low at 1111.25 remains intact. That is why S&T selected that line as the range bottom and is where the market would flip from range bound to trending fully-bearish again with a move below. See how that works?

So… countertrend bulls who bought the touch of 1111.25 at the bottom of the range are in good shape so long as the bullish trending structure within the range remains intact– but if 1111.25 fails, then the higher high/higher low reversal structure begins to fail, as well.

…my .02