BarroMetrics Views: S&P 2012-05-07
The price action this morning (HK time) was interesting enough to warrant my postponing the planned article.
Figure 1 shows that the E-mini, June (ESM2), gapped down from a close of 1362.50, opening at 1354 (8.50 points).
Moroever, the ESM2, if it accepts below 1352.50 raises the possibility of an 18-day Swing, Change in Trend Pattern. If that signal is given, the minimum target would be the 13-week line change price at 1303.03. Note that this price will tend to lift at the end of each week.
So what has to happen for the Change in Trend Pattern to invalidated?
Figure 2 provides the answer: all we need to see is an ESM2 DAILY acceptance above 1361. This would provide a buy signal for a move to at least the Primary Sell Zone, 1411.25 to 1419.75. (Figure 2 is a 290-min chart so as to better show the zones).
However, given the context, I rate the greater probability of be the sell signal. That being the case, if I am not short, where would I be looking to take a trade today?
Figure 3 is the 60-min chart. It shows that the resistance zone, 1367 to 1363 ought to hold if a Change in Trend is to occur. Now this level is above the critical zone of 1361. So if I take a trade at 1367 to 1363, I would need to see a strong close BELOW 1361 to hold the position.
FIGURE 1 18-day ESM2
FIGURE 2 290-min ESM2
FIGURE 3 60-min ESM2