Here is a quick check of the March ES hourly chart.
My first reaction to the pattern is that we had a bull flag on Monday that failed to break out in a meaningful way today. As a result, price is stalling at the top trend line of the rising wedge. This combined with hesitation to jump in before the jobs data later this week may be enough to send price action back to the lower trend line.
Do the technicals support this? I think so. Again, we see a negative divergence in the RSI over the last two sessions. RSI is decreasing (from an overbought state) as price continues to rise. This means that the market internals are weakening and the last buyers of the reaction high will have to cope with a drop. This RSI phenom can be seen last week as well where price bounced off of the top trend line twice (with RSI divergence) only to fall to through the 50p MA (thicker baby blue) down to the 200p MA (thicker white). We may very well see the same thing tomorrow and Thursday.
Notice that I have added the CCI oscillator to the study as a double confirmation. I look for the RSI divergence when we have a clear overbought condition in the CCI. I think we are there now. Also, the Turning Line (thin rose) of the Ichimoku is poised to cross down through the Standard Line (thin blue). When this occurs above the cloud , it is a strong sell signal. The top of the cloud is aligned with the 50p MA at the 1025 area. This is a likely first support point if we start to move down. This also matches with the low of the day today after that terrible housing report.
So, I am of course short a number of ES contracts looking for the play to 1025 - perhaps lower. Unfortunately, the action has been happening in the late hours - so it will be another sleepless night it seems.
Good luck trading!
2 comments:
David , with your Mojo back , you will make much better trades I am sure of it.
I dont expect it but a EWT , ending diagonal would be really cool to end this thing out and shock the world
Bulls need a strong day if all that divergence is going away, ?
Best of Luck
Hey Payline,
I'd welcome the event!
Earlier, I spoke of populist pressure regarding the FED and intervention. I think this is building:
NEW YORK (MarketWatch) -- The unusual circumstances that led the U.S. market to rally powerfully in 2009 might be explained by secret government moves to buy stocks, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market.
"We cannot identify the source of the new money that pushed stock prices up so far so fast," Biderman said in a statement Tuesday.
Article on MarketWatch.com
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