Emini trend line consolidation. The Emini closed down 4.25 points at 1,485.25 Friday on very light volume. The Emini has now consolidated between the upper and lower trend lines. Which way will it break?
Emini Trend Line Consolidation (daily bars)
The chart above has the trend lines drawn automatically by TradeStation. Breaks above a falling trend line are colored red and breaks below a rising trend line are colored green. When the Emini consolidates between rising and falling trend lines the bars are colored white – a typical triangle consolidation if you like. We now have resistance at 1,520 and support at 1,470, last Friday’s break away gap level.
Bonds Trend Line Consolidation (daily bars)
The chart above shows the Bond market is in the same position as the Emini – consolidating between trend lines. In addition I’ve marked what the Bond market was doing 20 trading days ago with the vertical blue line.
The Bond market tends to lead the Emini with turning points having a delay of 20 days typically. This article on Bond market analysis describes the phenomenon and more Bond market examples are shown here.
The Bond market topped out just over 20 days ago, tested that extreme level and then fell away sharply. I am not suggesting that the Emini will do exactly the same, but the direction over the next week may follow the Bond market – down. In addition:
- The 135 minute cycle is down
- TRIN, Put-Call Ratio and Smart Money oscillators have turned down
- Commitment of Traders Oscillator near over-bought
- US Dollar versus Yen has weakened
- Crude oil near record highs
- 1,475 to 1,485 gap looks like getting filled
Good luck with your trading.