Good Evening Traders,
This has been a shortened week, but some significant technical damage has been and also some key levels are not too far from here. Firstly let’s take a look at the daily chart:
Very impressive move on Thursday with ES gaping above key resistance line on the daily chart, holding and closing at the highs. Partly due to shortened holiday week, partly due to bears’ favorite FAZ losing 90% and blowing many accounts and partly due to many investors/traders awaiting more clear direction from the markets, the volume has been fizzling out lately.
Next Key overhead resistance level is Fib confluence zone in 870-872 area.
Lets zoom out and take a look at the weekly chart:
Weekly Heikin-Ashi trend has put in 3rd consecutive green bar suggesting bullish weekly trend is still in place.
As mentioned in many previous posts, all the major lows of this bear market have retraced at least 23.6% from the very highs and expecting this low to be no different reaching at least 883.5, with potential of double top with January highs or even full 38% retracement to 1020 if bulls get it together.
Not only is 883.5 a good target for this rally, but it should also be a high probability bounce area as it is not only Fib level, but also closely watched level by Ellioticians as it is some retracement of some wave of some cycle or something 🙂 (trust me I read that on few sites)
Also if we take a look at the monthly chart:
During July 22, that particular area served as support during 2 particular instances with 888.25 low in July, 2002 and 884.50 low in October 2002. Previous support is expected to become resistance and maybe that will finally be the point when we get some sort of significant retracement of this relentless rally.
Hope it helps
Happy Holidays!
Vlad