The 1630 level has been a focal point for the market during the recent advance, and the ES seems poised to test levels beyond this zone, as evidenced by the current pre-market high of 1638. The ES continues to push toward the important 1650 level for another test. As you know, this level had rejected every advance in June, and remains the key level to watch for the next major directional move in this contract.
If the upper trend line remains intact, we could see quite a sell-off back toward a retest of support at 1595 over the next day or two, which will be an important zone to watch. Beyond 1630 is the major 1650 level, which rejected every advanced throughout the month of June. Clearly, a decision point in the charts is upon us.
The ES continues to trade within the 1595 to 1620.50 range. More trading range activity is likely to occur within this zone heading into Friday’s market. A breach of 1595 opens the door to 1593.25, where programs may be tuned to buy the level on first test, so watch this zone closely.
Overall, the ES has had a very impressive relief rally after setting a low of 1553.25 early last week. However, there are signs that the relief is now exhausted. Yesterday’s sharp turnaround indicates a likely pull-back from current levels, but the first major line in the sand will be 1595. A break below this zone could lead to a move back toward the midpoint of last week’s range, which is currently 1583.75.
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.
