Upside Range Threatening To Extend Higher

January 22, 2020

Tuesday’s session played out as a doji consolidation day that acted as a high-level consolidation.  Overnight saw higher-lows & higher-highs structure into the top end of the pre-determined January range of 3337-3155 on the Emini S&P 500 (ES). This means that the upside range is once again being threatened to open up and extend higher as we approach the month-end closing print, as the downside/mean reversion setup has failed for now.

If you recall, on Jan 8 we held the daily 20EMA backtest region across all the equity indices and produced an imminent V-shaped recovery in the next couple sessions, followed by the continuation setup into this week’s likely higher-lows and higher-highs grind into new targets. Obviously, it’s been the same old structure since the October 2019 breakout acceleration as the bull train maintains course. The bull train structure will be trying its hardest to maintain the same structure into the January monthly closing print in order to produce a decent prerequisite for the January barometer stats.

What’s next?

Tuesday closed at 3320.50 on the ES and it looks like today or the rest of the week is dealt with the task of closing above/below 3337 to determine the next key setup as we head into month end. We remain in wait-and-see mode in figuring whether we need to re-calculate the predetermined overall range of January 3337-3155 or not. Again, this top end of the range area supposes cautionary signs and we’re starting to get our proprietary extreme signals across the board warning us. 

Here's a portion of our premarket ES game plan report:

  • Traders can utilize 3319 and 3307 as short-term trending supports for rest of today/week alongside with above/below 3337 as key momentum indicator. No current immediate targets.
  • With the price action unable to follow through for the downside quick mean reversion setup into the trending daily 8/20EMA properly, it’s time to look the other way for continuation
  • Bulls need a close above 3337 in order to enhance up of opening up the January upside range into the next calculated levels by continuing the grind into month end closing print
  • Mythical creatures/bears would need to breakdown vs. 3319/3307 key short-term levels to have a fighting chance into daily 8/20EMA that eventually acts as another buying opportunity. Otherwise, it’s another round of high level consolidation due to the structure of HLs+HHs
  • As we may discussed previously, the easy part of this month is pretty much considered over 3181->3337 given the pre-determined range via our calculations. This means that  traders ought to stay cautiously optimistic here while hedging themselves properly in a portfolio approach.

See chart reviews and projections on the S&P 500.

Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.

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