Hey Traders,
very low volume trading day today, with lowest ES volume since January 2nd, which makes you wonder if break above recent highs should be trusted. Will start building a bearish case from smallest time frames as bullish technicals start to break down.
Here is a quick summary of the past months activity brought to you by extreme, crazy, compounding, overleveraged financials trading vehicles FAZ vs FAS
Just when you think it “can’t go any lower”, think again, its price that pays and I bet a lot of greedy overleveraged bears got wiped out by their favorite “trading” instrument.
Daily Chart of ES:
ES Opened lower, backtested previously broken resistance and continues to grind higher above Thursday’s highs into the close, at again, very low volume. Major resistance is still expected at 870 through 885 (see weekly analysis for more detail). Also Max Pain on SPY options is 800, so a rip towards those levels is expected sometime during this week. Also, a big unfilled gap right below could act as a magnet.
Euro continues to trade in ambush consolidation zone, making some short term technical reversals to bullish. It is possible EC is forming a wedge with target of 1.25 lows. Another interesting set up is that 200DMA is now aligned with recent high of 1.3736 which could set up for a monster double top shall EC trade back up into the short ambush zone.
As expected in such deeply oversold conditions, gold has retraced some of the recent plunge and found resistance right near 50% retracement of recent move down. Break above 909 would probably mean a quick trip to test the trendline on the above graph.
Be careful during this Opex / Earnings frenzy this week
Good luck and good trading
Vlad