ES Update

Screen Shot 2016-02-15 at 9.33.58 AM

.

In my last post I pointed out the technical setup from the double bottom at the lower rail of the LT/IT bearish trident channel…

So far, that stop sweep/reversal setup under the old ST range bottom at 1804.25 at the lower rail is working out nicely.  As a matter of fact, that recent double bottom maneuver was actually a double stop sweep/reversal under both the ST and LT range bottom stops.

This morning the cash market opens with a gap and run in the futures that has popped the bear’s trailing stops above the ST trendline resistance.  The pros knew they could find buyers there (bears buying to cover short positions) and so that’s the reason for the overnight push.

Gaps show intent, and we have two open gaps in ES…the bearish gap at 1931.25 (for the run down to the recent low at 1802.50) and today’s bullish gap at 1858.25 (for the run to raid the stops above ST trendline resistance).  Those two gaps could define the trading range in the near-term.

The ST primary trend line from Stops and Targets recently moved lower, down to 1940, to follow the bearish market action and lock in minimum profits for those gaming the short side.  That is the line that would need to be taken out to flip the ST trend back to bullish.  Likewise for the VST.

Typically when the ST trading range is this wide, the pros will first build a lower high, pull back, and then eventually break through that new lower high to flip the trend–but if the pros have enough bears trapped and on the run we could see a squeeze develop without a pullback for the bears to escape.  As always, this is a game of pressure and intimidation by the pros.

Let’s see how the trading goes following the raid of the bear stops above the now broken trendline resistance. The pros have their initial target in hand at the open but we will need to see if more buyers come in once the initial covering bears have been digested.

Next target higher is the open gap at 1931.25.  Next target lower, if the squeeze fizzles and/or a lower short term pivot eventually gets built, would be the open gap at 1858.25.

The most recent technical buy signal (see Stops and Targets) was a ST and IT counter-trend buy at 1853.25, which is within the ideal entry zone for the LT timeframe (between 1814 and 1886.25).

.

.

Screen Shot 2016-02-15 at 9.57.35 AM

.

To help fine tune things a bit, the hourly bar chart shows VST/ST support and resistance.  First VST support for the trendline breakout is at 1877.75.  Next target lower is the open gap at 1860 area and then the last countertrend buy signal at 1853.25.  Next targets above are minor resistance at 1904.25 and then the bottom of the ST bearish ideal entry zone between 1918.25 to 1940

…my .02

.

.