Monday, July 13, 2009

At top of range estimate

Here is a five minute bar chart of e-mini day session trading for the past several days. The market has rallied to the top of may range estimate for the day (blue rectangle). In doing so it put in what could well be a wide range, volume climax bar (purple oval and price bar immediately above the high volume bar). The 889 level is midpoint resistance defined by the rally that preceded the low at 865.25 (purple dotted line). Moreover, the market has rallied to the upper parallel of a clearly defined trend channel (green dotted lines).

These are all reasons to expect a reaction to start from approximately the 890 level. If one does develop I doubt that it would carry the e-minis down more than 8-9 points, a little less than the size of the reaction we saw early this morning (purple rectangles).

I think the market has begun a rally that will take it into the 965-80 zone over the next few weeks.

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