The Emini closed down 0.75 points at 1,426.75 on Monday. Today was an inside day with low volume and so far support at 1,422 is holding. Take a look at the chart below that shows the rising trend line started on 11 October last year.
Auto trend lines
As I’ve mentioned before, I’m a big fan of TradeStation EasyLanguage and what you can do automatically on charts. The pivot points and trend lines are drawn on the chart above using some custom, but simple, code. The pivot point lows are shown as green dots and the rising trend lines are green. We’ve now had 4 points that connect this rising trend line and bounces off it over the last couple of days.
The pivot point highs are shown as red dots and down trend lines are red. Resistance is shown by an almost horizontal down trend line above 1,440. The pattern looks like a rising wedge with the up trend line and horizontal resistance line – and wedge patterns can break out either way!
The bar coloring is based on trend direction. Red bars are in a rising trend, green bars in a falling trend and white bars are undecided. Undecided means that the price action falls above the up trend line but below the down trend line. So effectively, white bars show indecision and lead to breakouts.
And still waiting for upswing
My current analysis points towards an upswing in the Emini, however, I’ve held this position for the last week with no significant movement upwards. Other commentators are saying that the market is waiting for the Fed meeting and public statements – I’m sure they’re right.
Friday’s action did see climactic selling at the beginning of the day and the Emini finding support at 1,423 and then 1,422 later that day. Monday’s test of 1,422 was at significantly lower volume than Friday which suggests that the bears have run out of steam on the downside. I will remain bullish unless 1,420 is broken on high volume.