The
Consolidation Ahead
Today’s session was fairly interesting based on the battle
of the shorter intraday timeframes vs. the longer timeframes such as hourly and
daily. First things first, as some of you already know the Hourly Extreme
Overbought “A+ Tier” signal was confirmed overnight at roughly 1:45AM when I
posted about it this morning at 8:57AM EST. That set the tone for day as long
as prices stayed below 1905 along with the overnight lower high pattern.
When the day session opened, the micro charts were really
shaky because the 5m+15m timeframes had double top vs. double bottom within the
first 35 minutes. This created the shakefest for the morning session and most
traders were probably feeling frustrated with the range. Once the bears broke
below the 1886.50 level they had a clear shot at 1882 to accelerate the bear
train. However, a 15m bull engulf quickly cemented the temporary bottom when
bears couldn’t decisively break below 1882 that got sticksaved by the bulls. Fast
forward, at 2:00-2:30PM everybody and their mother probably saw the clear flush
setup with the consecutive lower highs rejection. Overall, pretty shaky day except
the afternoon breakdown that stemmed from the massive feedback loop setup.
What’s next?
Daily closed at 1871.5 and back below daily 8EMA. The high
was 1904.25 from Sunday night vs. the 1907 major resistance we discussed in the
weekend report. This means that bears are actually stronger than we expected as
they rejected the bulls’ attempt of breaking above major resistance like
clockwork.
The Hourly Extreme
Overbought “A+ Tier” Signal
As mentioned this morning, the targets are 1860 and 1850 and
it invalidates above 1905. ES is trading at 1867.5 as of writing; bears should
not let bulls retake 1877 if this is going towards the initial targets. This
means that we should use 1877 as an ideal trailing stop.
Current Projections/Road
map:
1842-1860 is a major support area for tomorrow and the bulls
have a chance of being sticksaved there if the bears fulfill the extreme signal
targets. Assuming this key zone holds, we expect a temporary bounce back of at
least 25 points based on short-term oversold conditions. Eg. if sticksaves at
1855 then bounce to 1880, if sticksaves at 1845 then bounce to 1870.
The daily roadmap would be back to 1925~ which is the daily
20EMA resistance assuming the major supports hold the next couple days as it’s
setting up for a 1-2-3 trend change pattern here.
The alternative scenarios are that this turns extremely bearish
by breaking below 1836.25 and then we resume the daily 8EMA bear train. Or even
the bears can’t break below 1865 and bulls manage an overnight sticksave back
above 1877.
P.S. Targets from the Extreme signals are not the same as
immediate targets so do not be misled.
