There’s strong upside potential, here’s why
Wednesday’s session is poised to open
slightly lower than Tuesday’s close. With price action clinging to key magnets
of price action, we still await directional resolution to come.
ES (+$50 per index point)
S&P 500 posted a “doji” candle day of
indecision. Still holding below key levels of resistance, we also see where
price action is channeling upward. That needs to continue for upside potential
to exist, otherwise we’re looking at a bear-flag pattern which suggests the
recent decline from highs to lows is only 50% complete.
ER (+$100 per index point)
Russell 2000 has a similar daily chart
progression: still pinned below layers of resistance, trying to break upward out
of the same ascending channel (not shown). If the ER breaks lower instead,
expect at least the same distance down from here as traversed from recent highs
to lows already.
This Session:
ES (+$50 per index point)
ES worked its way lower yesterday, then
retraced exactly 62% of the drop upwards by the close. That 1200 level was
magnetic, and probably remains so until a decisive break up or down emerges.
Overall bias is buy signals above 1200 and sell signals below for best odds of
success today.
ER (+$100 per index point)
ER also retraced exactly 62% of yesterday’s
early drop by the closing bell. This is not pure coincidence… these patterns
happen for a reason, and we sure know how to exploit them. Yesterday was an easy
day to trade, with solid profits offered on several price swings up and down.
Summation
The downtrend has paused for now. Whether selling resumes or attempts
at new recent highs are ahead remains to be seen. We do have end-month window
dressing slated for Thursday and/or Friday this week, so upside potential then
is strong. Next week’s FOMC event lies in store after that, so we have no end of
market catalysts to keep the tapes shaking. And that’s a good thing, for those
of us who do fit in! (apologies to Martha in this closing parody).
Trade To Win
Austin P
(free pivot point calculator, much more inside)
Austin Passamonte is a full-time
professional trader who specializes in E-mini stock index futures, equity
options and commodity markets.
Mr. Passamonte’s trading approach uses proprietary chart patterns found on an
intraday basis. Austin trades privately in the Finger Lakes region of New York.