The S&P500 (ES) is bouncing going into today’s European morning after yesterday’s 1.5% plus slide. Significantly, although odds are moderate for ES to reverse all of yesterday’s losses by Wednesday following the FOMC and Fed rate announcement, there is a high probability that a major top has just formed. A lower October high (versus the September high) will help with confirming the major top. With the current weekly candle having broken below an uptrend support connecting the March 2021 low to the June and July lows, ES is likely to test upchannel support (on the weekly chart) before month end. The weekly RSI, Stochastics and MACD are sliding, weighing on the tentatively bottomish daily RSI and Stochastics. I am looking to go short in the red zone (of the daily chart), targeting the green zone for Monday. The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I sometimes set my stops tighter).
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