I was wondering yesterday afternoon about a possible bounce overnight to retest the daily middle band on ES as resistance and we saw that test, and it has held as resistance so far. As long as that remains the case we now have mostly formed H&S patterns on SPX, RUT and NDX ready to take all three down on another leg down towards the 50% fib retracement of the move up from February on SPX and RUT, and almost a full retracement on NDX. Here are the setups on those three charts. SPX 60min chart:
RUT 60min chart:
NDX 60min chart:
On the ES chart I’m slightly concerned by the weak 60min buy signal but the path back to the 50% fib retracement of the move up from the Feb low is all laid out for the bears now. All they have to do here is not drop the ball, though obviously this has been an issue on occasion in the past. ES Jun 60min chart:
The next steps on this setup are firstly for SPX to fill Tuesday morning’s opening gap at 2058.69 and convert that area to resistance. As it is at the same level as the ES weekly pivot that would mean that both key support areas on ES at the monthly and weekly pivots were converted too. After that a sustained break below the H&S neckline in the 2040 area should deliver the next leg down.
