The E-Mini S&P 500 had been trending lower within the boundaries of a well-defined channel. However, today’s decisive breakout indicates continued strength heading into the weekend. Here’s more..
Channel
The 60-minute chart of the ES shows price had been trending quietly lower within a two-week downtrending channel. Every bounce off the upper and lower boundaries was highly anticipated, but today’s violation was not.
The fact that price opened the session with a large breakaway gap and an Open Drive opening type was indicative of major strength, which lasted throughout the session.
Now that the channel is toast, we could see another round of strength ahead, especially if price remains above Tuesday’s opening print.
Higher Value Relationship
The 5-minute chart shows a clear Higher Value relationship has developed using the developing Pivot Range, which occurs when the upcoming session’s pivot range is completely higher than the previous session’s pivot range.
After a significant trend day, you typically see one of two things: 1. follow-through 2. digestion.
In either case, the higher value relationship can give us a great entry that allows us to profit for either scenario.
In both cases we might see early weakness that leads to responsive buying. We’ll get follow-through if Tuesday’s high is taken out, or we’ll get digestion if it’s not.
We’ll be looking to buy into any morning weakness Wednesday morning. If price opens above 1,234, look to buy between 1,230 and 1,233.25. If price opens between 1,228 and 1,233, look to buy between 1,227 and 1,231.
Look to scale out at the following targets: 1,236.75, 1,243.25, and 1,248.25.
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Let’s see how Wednesday shakes out!
Cheers!
Frank Ochoa
PivotBoss.com
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