After melting up gradually yesterday we have continued to melt up slowly
on ES overnight. The support / resistance levels that were established
on the way up the first time have continued to be important on the way back up. We
bottomed near one at 1177.73 on Tuesday and retested it three times over
the next day before breaking up through the next one at 1187.90 late
yesterday. Since then we saw a retest of that level overnight and ES is
now close to reaching the next one at 1197.21, which looks good for a
scalp short as there will probably be a bounce off it even if that level
too is broken later on:

That level may not be broken though. If this downswing was not just a
two day wonder and we are establishing a declining channel that will
last a few more days, then I have a provisional candidate for a new
declining channel on the SPX 60min:

If this new declining channel holds, then we should see some very good
resistance in the 1200 SPX area, depending on when the line is reached,
and would turn down there with a target below 1170 SPX. We would also
see a retest of the broken lower trendline of a previous rising channel
near the 1200 SPX level.

I don't have any new potential rising channels on the SPX 60min chart as
yet, as all three of my previous rising channels have been broken, and
we would need to see where we turn down next before I could start to see
where a new rising channel might be. On the bullish side on this chart
though, there is also the neckline of a potential IHS in the 1198.5 SPX
area, and if we turned down from there then we might be watching an RS
form with a pattern target in the 1215 area. That is very tentative at
this stage though, and even if this forms, the neckline could move if it
turned out to be a sloping neckline.

There is another larger head and shoulder pattern that may be forming at
the moment, with a downsloping neckline and somewhat further advanced.
Here it is on ES:

I don't much like this H&S because of the downsloping neckline, as I
have found these less reliable than H&S patterns with horizontal or
upsloping necklines in the past. I would find this pattern much more
convincing if the right shoulder develops to a similar level to the left
shoulder, as classically shoulders should be at a similar level
regardless of whether the neckline is sloping. That would take us to my next ES
support/resistance level at 1207.46 though and in the process would
demolish my provisional declining channel on SPX.

Overall I've no strong feeling as to where this market is going
today but I do think that this may well be a good scalper's market
regardless of direction. These ES support/resistance levels are roughly
equivalent to the SPX ranges 1180 – 1190, 1190 – 1200 and 1200 – 1210,
and we seem to be moving up through these ranges at the moment and
bouncing well within them. As I've been writing this we've reached my
next ES resistance level at 1197.21 and bounced off it, and as long as we
keep doing that at these S/R levels, then there are a number of scalps to
be taken at the least.