The ES rising channel is very strong, and has resisted all attempts so far to force it to break down with the sheer power of persuasive charts suggesting that it must, but while we're waiting for inevitable break, whenever that might be, this ES rising channel is extremely tradeable, particularly for futures and CFD traders, as there are multiple useful good support and resistance levels within it:

The first set of support and resistance trendlines are the internal parallel diagonal trendlines within the channel. These have been important as you can easily see. 

The second set of trendlines have been even more important so far however, and they are the horizontal trendlines that I have marked in red within the channel. These give very useful entry and exit levels for short term trades as they have been extremely good in establishing horizontal trading channels within the main rising channel. 

Once a new horizontal support/resistance channel has been established, it is rarely broken. You can see that only one level has been broken so far, and that was at the touch of the bottom channel trendline on Monday. Once broken on the way up, these then act as an effective support floor until the next horizontal support/resistance level up has been broken. 

As for the current channel, it was established yesterday with a ceiling at 1165.5, having risen straight through an intermediate channel on the way, which has happened once before lower down. The floor of the new horizontal trading channel was therefore unconfirmed until we had a spike down near the close to confirm it, and I drew the new floor level then and posted it in various places. You can see that the floor was tested again overnight and was effective support. 

A couple of further points about the main rising ES channel are worth noting. 

Firstly, the bottom trendline of the channel is now at 1153. If that is broken with confidence then the rising channel will finally be broken, and a significant interim top is likely to have been made. That breach would have to be sustained until the end of the trading hour, as this is an hourly chart, and both the top and bottom trendlines on the channel has been breached for short periods before within a trading hour, so a break below that was not sustained would not be a definitive break until the end of the trading hour. 

Secondly, the last touch of an outer trendline on this channel was at the bottom trendline, and we should not expect that the bottom trendline will be touched again before the top trendline, currently at 1176, is touched first. A touch of the bottom trendline again before that happens would be a part-rise and a strong signal that the channel is likely to break downwards. By no means would that be a certainty until it does break, but that will give a useful signal that it is time to consider repositioning short. 

That said, the obvious short term trade there would still be to go long, as the risk/reward for a long there with with a stop four points below would be so high that it would be a good trade in any case. Definitely a trade to use a tight stop though.

Now that every bear – even the folks at Elliott Wave – has thrown in the towel, the market may have permission to soften up some. Of course, the legend of OPEX week – particularly a four-witch one – has a couple more sessions to hold sway.

I find the chart below of the Small Cap 600 index to be interesting based on the relationship of its price to the Fibonacci arcs. It seems to cling to those arcs rather nicely, and prices are on their third swoop higher relative to the closest arc. The most recent rally was explosive, similar to the one experience last summer during late July and early August.

I'll also mention that, having gone through my thousand charts last night (which is a daily thing for me now, whereas it used to be weekly), I did smoke out a bunch of bullish charts………but they are almost without exception crummy little companies (like CROX). I like the charts, yes, but there's no doubt this rally is based on crap stocks (rinky-dinky banks in particular, plus insolvent GSEs) and little else.