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Friday, 19 May 2023

Back At Major Resistance

Well the bearish stats for Wednesday and Thursday this week did not deliver, which was remarkable yesterday as at the start of the day there were hourly sell signals fixed on all of ES, NQ, RTY & YM. That equities went up hard instead was an impressive show of strength, bringing SPX back up into a full test of key resistance at the monthly middle band, now at 4169.46, but not broken until there is a monthly close above it, and the main support/resistance trendline from the 2009 low.

That is still very strong resistance, but after the rejection back up here, and the very strong action over the last two days, I'm increasing the odds of a break above from 25% from 35%.

SPX monthly chart:

I posted my premarket video at theartofchart.net this morning on my twitter and I was talking again about something I was also talking about at the early May low. Then I was talking and writing about downside being limited by the proximity to the daily 3sd lower band, and this morning I was talking about the proximity to the 3sd upper band, estimating that ES was unlikely to get over 4240 today. The high today was at 4227, with a backtest of 4190-4200 from there. I'm expecting this to follow through on Monday to clear the rest of the negative divergence on the hourly and 15min charts.

SPX daily BBs chart:

On NDX, with both RSI 14 and RSI 5 sell signals currently fixed, this could still be an overthrow from the wedge I posted on Wednesday, but I would note that the break over the August 2022 high at 13720.90 is also potentially a break over double bottom resistance with a target back at the all time highs. From here I would expect to see either that move, or a rejection back into the October 2022 low at 10440.60.

NDX 60min chart:

In the short term on SPX a perfect rising channel has formed from the early May low, and the next obvious target within that rising channel is rising channel support, currently in the 4130 area. I think we may well see that tested on Monday or Tuesday next week.

SPX 15min chart:

Looking closer at the setup from the early May low, there is also a shorter term rising megaphone into that channel resistance which started breaking down at the lows today. I'm expecting that break to follow through to the downside early next week, then we'll see what happens there.

SPX 5min chart:

On the bigger picture I still think that the odds are 65%+ that SPX has topped out or is topping out short term for at least a decent retracement. Is there a chance that SPX will break up over resistance here instead of failing? Always, every good setup can always fail and go the other way, and I have currently assigned a probability of 35% to that.

I entered a model trade with 9x MES (micro-ES) just before the close on Friday 28th April short at 4190. That was stopped out even yesterday and I may re-enter, but am planning to watch what happens next week to see how this develops.

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