After making all-time highs last week, the market as represented by the S&P futures (ES), is pulling back. I think this will be an interesting and telling week. On higher time frames, the market is overbought. That being said, the higher time frames are also in clear and strong uptrends. How the market acts this week will tell us whether the current pull back is just a minor retracement or we are in for something deeper.
The market fell on Thursday and Friday, causing the weekly chart to put in a down close. Despite the negative weekly bar, the daily showed some reluctance to fall much farther on Friday. Watch for the market to hold either just above Friday’s lows or better, an intraday Spring of Friday’s lows on Monday. Intraday support exists around the 1819 level. If the market fails to push lower and begins to rally above Friday’s low, we can look for a likely push up to and perhaps above 1830.
Should the market not be able to hold these levels and instead start dropping down lower, it could push down to the 1800.00. I would expect short term support to come in at 1800.00 if it decides to run down that far.
The Primary Language of the Market
Keep your calendar clear for January 22nd and 25th. We will be doing a 2-part webinar on how to read the primary language of the markets: price bars and volume. We’ll spend two full sessions on this important topic. If you have been struggling with indicators or have always wanted to be able to look at a chart and read it by its own actions, this will be for you. The sessions will teach you the fundamentals used by successful traders. Designed for both experienced and new traders. Detailed information and registration can be found here: Learn the Primary Language of the Markets
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