Last week I posted Is it Finally time to binge FazPAIgNe? where I ventured to guess that market might be due for some pullback here. I am by no means marrying that view and will let the stops do the work, but here is my reasoning:
Firstly, bullish percent Index is within 0.06 of the highs it reached before previous 50 point pullback, and 75s on BPNYA has not been seen since before bear market has started:
Secondly, on the weekly chart ES is coming up to a downtrendline that has provided some resistance:
Even though options expiration is not till next week, max pain for June on SPY is 83, which is ~830 ES, here is a post before May OPEX - “Welcome to Opex Madness”, ES retraced quickly towards that level, so would expect at least some move towards that level,considering ES is now trading 110 pts above.
Along with with very oversold dollar, that should cause equities to pullback on a rebound, that is the bearish case.
As far as bullish case is concerned, ES continues to trade above 200dma with 50ema closing in on what would be a bullish cross. Weekly candle has closed above the previous 2009 January high, which is bullish for ES. ES has been clearly in a strong uptrend and some technicals will have to break down to be able to add to the bearish case.
Bias, opex , bullishness % index are all indicators to give clues, but it’s only price that pays, so will be watching following immediate s/rlevels for futher direciton clues:
On the upside will be watching 845-848 ambush zone for resistance, if it breaks then ES is becomes very likely to retest the rally highs of 957.50 with Weekly R1 right above at 959.25.
On the downside will be watching 830.5 fib confluence zone / ambush for support, below there 922s, which is previous swing low and also ambush.
As always will keep posting daily and intraday updates as new technical developments take place.
My updates on twitter @esecfutures for new post and technical level notifications, as well for my overnight trading levels which I do not post on the blog.
Have a great week