ES Long Signal

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If you have been following our advice on May 15, 2015, you may have made some good profits on the latest correction (see chart below).

Here is what we wrote on SOH, that date:

Now a good, new going-SHORT opportunity is coming up in these days […]. The ESM15 has almost reached a DAILY area where the odds to go SHORT are quite good: 2127.25, 63.82% overbought. WEEKLY and MONTHLY time periods are not supporting the trade, meaning that this is probably only a quick swing trading opportunity, however things may change if/when the market reaches the ~2140 price area. From there also the WEEKLY and MONTHLY overbought gauges will go above 50% in value and thus create a better-than-a-coin flip edge for the SHORT trader.

If you check the chart above you will see that the ESM15 market peaked on May 19th at 2134.00, and from there it went downhill, confirming what we said, a high probability of SHORT reversal (=from uptrend to downtrend) in the area indicated.

Now the tables are turning and the market is starting to be DAILY/WEEKLY OVERSOLD and thus a bounce is probably likely to come soon. This information could be used as follows:

a) to take profit from SHORT positions (eventually re-opening them after the bounce)

b) to go LONG

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Here below we can see an analysis of the TIME perspective on our model, i.e. as a price leg moves in the same direction for a while it becomes more likely to see a trend reversal, and we can see that we had 3 days down and 2 weeks down and those two time periods are suggesting that there will be soon a change in trend (albeit 3-4 weeks down in a row is not impossible, so you always need to mix the TIME analysis with the PRICE analysis, see next screenshot below). 

The PRICE analysis model (below) shows us that 64.55% of the DAILY+WEEKLY+MONTHLY (combined) cases recorded in history are scenarios where the market does not go lower than the 2081-2070-2065 D/W/M levels during this type of retracement pattern. This LONG setup shows that the market has now a better-than-a-coin-flip chance to bounce up, at least DAILY and WEEKLY (MONTHLY is not OVERSOLD yet, so there could be lower prices after the DAILY/WEEKLY bounce, or in other words a continuation of the downtrend).

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