ES Update

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Trading range 1152.25 – 1212.  The doji candlestick pretty much tells the tale of the current setup.  Last signal range is 1185 (primary trend support) to 1212.

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Yesterday I speculated that the pros were looking to squeeze bulls who chased the ST trendline breakout above 1182 and then missed the partials exit at 1212 (range top) area.  The actual low was 1181.50, so not too bad of a guess.

That range between 1182 and 1212 is likely the setup zone for whatever assault on our sensibilities the pros have planned for the FOMC announcement scheduled for 2:15 pm ET tomorrow.   ES is set up to potentially jump serious resistance between 1212 and 1230, and that would be the first guess for what is coming–but we’ll have to see how it goes at the key levels.

Above 1224 and we will get a new pivot high in the higher high/higher low reversal sequence–and that would likely finish off the last of the bears who have been hanging on since the spotter low on 8/9.  That is assuming that bears are in the sights for potential FOMC shenanigans.   A break back below 1182 would take out the ST setup and target the range bottom at 1152.

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I have posted an updated daily chart above showing the trend channel from the spotter low and the significance of 1123.50 and 1224. To continue the sequence, ES needs a move above 1224 to set a higher high, whereas a move below 1123.50 would break the higher low sequence.   This pattern is possibly a bear flag, but bears aren’t back in business until/unless 1123.50 is broken to the downside.

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The chart above is another daily bar chart showing the trendline setup in multiple timeframes.  I mentioned recently that we had a confirmed IT low in place and I have drawn in that support trendline.  We also had a recent ST trendline breakout at 1182 that snapped the ST bearish setup from 1224, and that is why 1182 is an important line–and why we saw a bounce there yesterday.

To be more specific on the trendline setups, we have a LT downtrend below 1270, an IT range inside the contracting triangle formed by converging resistance and support, and a ST uptrend > 1182 from the resistance breakout.  S&T is faster than trend lines for trend detection, but we see general agreement between two different systems as we await the ultimate outcome of this reversal channel inside a consolidation range.

…my .02