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ES #F Supply continued
On the 28th of December we warned about supply entering the market and to watch for sustained Selling pressure. This is exactly what happened on Friday and the 2679 level was broken. Comparative weakness has developed, Volume flow is to the down side and the Multi Time Frame Tool is firing down, with Volatility increasing. The result was a 30.5-point ($1525 per contract) move down from the new all-time high at 2698.25, taking out the previous high by one tick. There were several clues, giving clear warning signals:
Follow through to the down side or not, will be key for the next move. On the daily chart Yesterday’s price action looks like an up thrust (price penetrated previous resistance/high and reversed immediately down to close in the bottom half of the bar). Price can move sideways from here and probably will make a pullback upwards, but our next target is 2651.75 if no bar closes above 2679. If 2561.75 is broken our longer term targets is at 2620 and 2605.
At the moment the S&P 500 mini contract (ES) is trading at 2677 after a little recovery from Fridays close at 2676 as expected. Buying pressure is developing and if no Selling pressure develop we should see the 2685 level acting as resistance. If buying pressure could not be sustained and selling pressure develops we should see the 2668.50 level being tested again. A bar close below this level would probably result to a down move to the 2651.75 level. Volatility is still increasing at the moment, and if it does not stabilize the next down move could begin with further increased volatility.
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