The ES is holding above short term support at 1595, which will be a key zone to watch for early directional conviction this week. If price continues to hold above this zone we could see another push toward a fill of the gap that was created the day after the Fed news.
Longer term, the ES remains very bullish. The weekly chart continues to show strength off the recent lows, which could lead to another longer term wave of strength.
As expected, the E-Mini S&P 500 finally made a run for our 1601 target Wednesday and put in a high on the day of 1601.25, which was hit with immediate selling on first touch. However, the market remained strong into the close, and continues to remains strong in overnight and pre-market trading. As a matter of fact, price just put in a new high on the day at 1604.75 and looks poised to test the 1608.50 level above.
The E-Mini S&P 500 continues to march higher after forming a recent low at 1553.25, and I’ve had my sights set on a retest of the 1600 level. I mentioned before that after a steady decline like the one we’ve had since last Wednesday’s, there is a tendency for the market to get a reaction rally. It’s what happens after the reaction rally that gives us a better sense of upcoming direction.
Typically speaking, when the market breaks a major technical support level, a retest of that level from underneath is usually sold, thereby sparking a bigger round of selling. If this case doesn’t play out, however, it will tell me the market remains extremely bullish. Only time will tell.
