Headed to 1,700 | PivotBoss

The E-Mini S&P 500 showed weakness heading into the Memorial Day holiday weekend, but buyers look poised to return.

No question about it, the E-Mini S&P 500 has been extremely bullish this year. What’s impressive is the fact that the ES has actually increased its bullish intensity since the 1,530 retest in late April, and could be poised to head higher after last week’s 3-day pull-back.

Confluence of Support

We’ve all been waiting for some semblance of a pull-back to occur in the ES during the recent 5-week advance, but price never even broke a prior day’s low, let alone see a meaningful retracement. That all changed Wednesday when price finally gave us what we were looking for – a “blow off” top. And while traders had been looking for this sort of price behavior to finally creep into the market, it’s remarkable to see the buying tails that formed Thursday and Friday, as these patterns show buyers have already been quietly active between 1,635 and 1,650.

As a matter of fact, it’s quiet impressive that after the volatility we saw heading into the holiday weekend, we could be headed higher once again.

The daily chart shows buyers defended the decline at a confluence of support at 1,636, which is the monthly R2 floor pivot and monthly VWAP. Any time price tests VWAP during a unidirectionally strong market, you can be sure responsive market participants are likely to defend the level.

In this case, the defense of the pull-back during Thursday’s and Friday’s market is quite bullish, and it could be the low heading into a potential test at 1,700 above.

Targeting 1,684.25

The ES has an average 5-day range of 40 points right now. By taking the current overnight low of 1,644.25, which currently doubles as the low for the week, we can forecast targets of 1,674.25 and 1,684.25 for the week.

As of right now, the ES is currently trading 1,663.50, which is already 13 points above Friday’s close, meaning traders have already gotten a headstart on the next upswing. If 1,636 continues to hold, I’m watching 1,674.25, 1,684.25, and 1,700 as this week’s targets, with more room to run.

Let’s see how this play outs.

Cheers!

Frank Ochoa
PivotBoss | Own the Market