Trend line congestion and we're winding up for a breakout. Second day in a row with below average volume and below average range – not surprising after Tuesday's rally.
Trend Line Congestion Zone (Emini 81 minute)
The Emini chart above shows we're in a congestion zone (white paint bars). This means we're both above the rising trend line and below the falling trend line. Breakouts out of congestion usually lead to large moves and typically go in the direction of the trend preceding congestion (in this case up).
Another sign of strength is that the Emini bounced off the 1,360 level today, which was the high of the last push up (dotted line). Resistance has now become support.
Hilbert Sine Wave (Emini daily)
On a daily time frame we've also broken above the Hilbert Sine Wave cycle high (red dot in the chart above). We're continuing to hold above this level, which is good news for a long trend move. However, the last time this happened the Emini failed to follow through and ended up testing the lows around 1,260.
Tomorrow's employment numbers will no doubt provide the fundamental news required to kick a break out move into action. I'm looking for the Emini to break above 1,380 into the next leg up but will stay vigilant for large volume profit taking on the news.
Emini-Watch passed 500 subscribers this week! A big thank you to all of you for your support. I thought this might be an appropriate time to run a little contest. All you have to do is answer a couple of simple questions – the winner will receive a copy of Roy Kelly's latest book, valued at $164.
Roy Kelly is a successful trader and runs the TrendPro.com website. In the book he lays out his cycle trading methodology in detail – if you like Emini-Watch, you'll like Roy Kelly.
P.S. Let's say I'm really lucky and get 5% of the subscribers to enter the contest – that means you've got a 1-in-25 chance of winning! Go on, give it a go.