Slope of Hope Blog Posts
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The ESH16 market last week closed down, losing about a 100 points in value from the previous week’s highs. Looking at the ESH16 WEEKLY chart below you can see that the price trend, after recovering, faltered. What have we learned from the last few months? That after a correction there is a mass of buyers ready to step in and push prices back up to the previous top in the ~2100 price area, but as soon as the price reaches that zone the buyers disappear and the market tanks again. Very interesting.
The next valid WEEKLY resistance, according to our quantitative models, is at ~2074, and next valid WEEKLY support is at ~1979 (OVERSOLD).
If there is an attempt to rebound from current levels, the market will encounter WEEKLY/MONTHLY resistance in the ~2074/2166 area, according to our models. There it would be reaching the end of any uptrend, we are not at a major market bottom from where the upside can be considerable.
In short, this means: a rebound is possible soon, but the upside is capped at around ~2100.
First of all, let us say we do not imply that going LONG at this juncture is a good idea: it’s not. (Editor’s Note: I certainly agree with that!)
As soon as the market reaches above ~2100 it will be OVERBOUGHT according to our DAILY, WEEKLY and also MONTHLY SHORT model, so you do not want to be a LONG holder at the top.
However, each time the market goes down (as it did yesterday), an occasion for a DAILY swing trade is created and these occasions sometimes can be VERY profitable. Our ES DAILY LONG model can help with that, providing some information that can take away the noise produced by looking at charts or checking the news (there is no information in there, just noise). For example today we are seeing this, for the current retracement down currently unfolding on the ESZ15 market:
IWM has been pushing up quite strongly as of lately, it is up 4 days in a row and in our view ripe for some pullback soon.
This would be a quick trade on NZDUSD, LONG, possibly targeting the 0.6546 target. NZDUSD has been up last week and up for the last 2 months (September and October, not November), we like it more SHORT than LONG, but a small opportunity for a quick profit is always worth trying.
This model below is our quantitative LONG model for NZDUSD LONG. What we do is to calculate statistically what price levels usually determine a trend reversal (i.e. a bounce), based on a very large databases that contains all the historical price retracements for this market since 1991, i.e. 25 years of data.
If you have been following us in the past few weeks, you will know that we have been insisting saying that ES was a SHORT, in part because of the large number of consecutive higher WEEKLY closes (5 and then 6), which some people thought was an indication of strength with a high probability of continuation of the trend.
Obviously they don’t know what they are talking about.
Here below is a WEEKLY chart that shows what (almost) always happens when a market pushes to its limits (this is the ES market, after 6 weeks up in a row):
Now, before some smarty-pants is going to jump up and say the money was made on the LONG side of this leg, please remember we have offered the BUY signal long time ago, when the market was down below 1900, so if you were a subscriber you know where the time to BUY was and if you did buy, it would have been a great success. After a certain point it was time to SELL and there we were until a few days ago…