Just when you think the tape has gone into a persistent vegetative state it can sometimes surprise you, and ES did that yesterday with an unexpected trend down day. This is good news from a technical perspective as there is usually a spike down shortly before a significant high, and I was thinking that ES most likely didn’t have the juice to manage that this week. We call this the low before the high, and, if this is that move, then we are looking for a low shortly into a retest of the all time high and likely marginal new high. If that marginal new high can be managed this week then the first day of 2017 may be the start of a significant decline.
Last night I was looking at the support trendline options and it looks as though first support may well hold, as yesterday’s low was retested overnight with a marginal new low and a 60min buy signal has now fixed. If we see lower lows today then I have possible flag channel support in the 2238/9 area and I am expecting one or the other of these levels to hold. A break under 2235 opens up the downside and broken support turned resistance at the weekly pivot at 2260 is now resistance on the upside. ES Mar 60min chart:
NQ also delivered a marginal lower low and 60min buy signal overnight. NQ Mar 60min chart:
No lower low on TF but I’d like this to be a triangle, and my preferred triangle support trendline would have been broken by a lower low. If that holds then the next obvious target would be triangle resistance, currently in the 1381 area. If it breaks then we could see a move to possible flag channel support in the 1341 area. TF Mar 60min chart:
I won’t be around much in the morning today as I have guests up.