Monday’s session showcased commitment from bulls as they defended against last week’s 2980.75 key range low support on the Emini S&P 500 (ES) with a double-bottom low at 2982 during Globex trading. Price remained above the daily 20 EMA in the 2970s as the whole range day ground slowly higher with higher lows and higher highs into the regular trading hours (RTH) closing print.
The main takeaway is that the smaller range of 2980-3025 is taking place within the overall 2955-3025 range of the past couple weeks. Everybody and their mother seems to be waiting for this high level consolidation/digestion to complete and for the move toward new all-time highs as we head into next Monday’s quarter end and into October.
The ES closed at 3001, so let’s see if price action is able to show commitment for day #2 here by closing above 3000 or 3018 in a consecutive bullish manner for the daily print.
Here’s what we’re looking for:
When above 2993/3000, the bias is to look for bullish intraday higher lows that fit within the overall daily higher lows pattern. Adapt when below support because one more low is still possible.
The market is technically still in consolidation mode given last week’s inside week, with 3 weeks up in a row and 1 inside week so far as we head towards month end closing print. We’re expecting bulls to attempt the bullish monthly closing print next Monday when above the support level of 2980/2972 given how resilient the pattern has been.
The market can trade both directions this week, but odds still heavily favor longs if the trending daily 20EMA holds, as everything is just a bull flag on the weekly chart.
Odds would start to shift if we get a close below 2972 as it opens up the 2955 “sh*t hits the fan level” from July for another backtest threat from the bears.
There’s a potential feedback loop to the downside given the 3024.5 double-top possibility, but no support has been broken yet so current odds are low until levels actually break.
Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.