The 5dma Three Day Rule – Day Three

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ES/SPX found support where expected on Friday and reversed back up towards triangle resistance as expected, and then gapped over that at the Sunday globex open and the SPX RTH open, which was not expected. The triangle may be breaking up with a target at the retest of the all time high, and the opening gap up from 2355.84 is a candidate breakaway gap into that retest. There is a possible high here, but bears need to break down hard and fill that breakaway gap, ideally today, at latest tomorrow. Otherwise SPX likely retests the all time high. The 5dma is currently at 2351 and is likely out of reach for a close below absent a serious news bomb today. SPX daily 5dma chart:

170424 SPX Daily 5dma

On the 60min chart SPX is close to a backtest of broken triangle resistance, currently in the 2367/8 area. A break below triangle resistance opens a possible gap fill move. The rising megaphone on the RSI 14 is cautiously bearish. SPX 60min chart:

170424 SPX 60min

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ES backtested broken triangle resistance after the gap above it overnight and is retesting it again as I write at 2365/6. If that holds as support then bulls can try to retest the globex high, and on a break above I have a rising wedge target at 2379 and obviously a possible retest of the all time high above that. ES Jun 60min chart:

170424 AM ES Jun 60min

On NQ the globex high (at a new all time high) established a decent quality rising channel, and if that holds then the next obvious target within the channel is channel support, currently in the 5360 area. If channel resistance breaks slightly then there is possible alternate rising megaphone resistance currently in the 5512.50 area, and on a sustained break above that I have no obvious further resistance trendlines on NQ. This setup leans cautiously bearish (under 5512.50) with NQ still on a 60min sell signal from Friday morning. NQ Jun 60min chart:

170424 AM NQ Jun 60min

The 60min sell signal on TF failed on the spike up overnight and a decent quality rising channel from last week’s lows was established at the globex high. Since then the channel has held, a possible small double top is forming and a second 60min sell signal has fixed. Rising channel support is currently in the 1384 area. Again this setup leans cautiously bearish. TF Jun 60min chart:

170424 AM TF Jun 60min

The globex high was at the maximum area on ES that Stan gave on his weekend video and our main scenario has ES/SPX failing here into a downtrend that lasts into the summer. To deliver that bears need to impress today or at least tomorrow. That’s the 70% option. The 30% option is a retest of the all time high. On a break over 2380.0 ES that high retest becomes the 70% option. Either way that downtrend into the summer should be starting within days, and may obviously have already started. In the short term, absent a more enthusiastic decline getting started, the setup so far today on SPX looks like a bull flag forming from the opening high at 2374.86.

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