Last week was option expiration week. S&P 500 (SPX) and $INDU had a divergence with Nasdaq and Russell 2000. Even though SPX and $INDU stayed up near the top of the range, smaller stocks started to turn down. Sooner or later, the blue chips will reach its turning point.
In the past week, ES mainly went sideway and made its broad range from 1445 to 1412. Last week, it made a narrow week seven (NR7) which told us this market is in contraction mode. Expansion should be happened this week.
Based on weekly indicators, even though the MACD histogram is on negative side, for the long run ES remains bullish. As long as price doesn’t breach 1431-29 support range, bulls still take control. As soon as price breaks out 1445-47 range, it should head toward its major resistance level 1455. If ES fails to breakout, it is likely to go down to test 1431 level or lower to the 1414-12 range.
Major resistance level is 1455 and major support level is 1412.
Last Friday ES made its narrow range day again, but this time it was an inside day. Today expansion movement should be expected. Which direction should ES head? It depends on first hour breakout direction.
Based on the indicators, ES could go either direction. But upside has more chance than downside if 20 day moving average line can be held. It is likely for ES to go up to 1449 or higher 1452-55 if it can breakout 1445 level. If ES breaks down 1427 level, all upside move will be cancelled, and then it is possible for ES to go down further to 1418-17 range.
Due to last Friday’s narrow range with inside day pattern formed by ES, we will likely see a wild day today and possibly a strong trend day. Which direction? So far nobody knows, all depend on this morning early move. We are looking to see if the price breaches last Friday’s high or low first. That will probably set the direction for the rest of the day.
For upside, breakout 1439 level, it is likely that price could pop into 1445 level. Breakout 1445 and confirmed by 1447.25, all shorts will be squeezed and could push price higher to 1449-1452.75 range.
For downside, breakdown 1431 level, it is possible for ES to go down 1425-24 range. Breakdown 1424, all longs will be squeezed and could push price lower to 1418-1417 range for searching support.
Intraday swing position entry on short side:
1444.75 (Agg.scalping) 1447-48.75 (agg) and 1451-53.25(cons)
Intraday swing position entry on long side: 1427.50 (agg.scalping) 1424.25-23 (agg) and 1417.75 (cons)
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