posted 3.30pm EST
from pre-open analysis 03-06
>>694 is the High of Yesterday’s Value Area – if we see a probe above that it could attract a selling response and that could set up a weak end to the week as so often happens in a bear trend. However if price meets acceptance above HYVA then 700 is the obvious resistance as the week’s halfway point. Certainly wouldn’t look to short if ES prints above that level.<<
ES opened on Friday within Thursday’s value area. There was a probe higher within the first fifteen minutes and as anticipated it met with a selling response just below 700. Selling continued nearly allday taking ES to a new low.
Monday is the hardest day to judge. Often, the controlling group will rest and allow the other side to appear. Once the group in control has gauged the response they will choose/not choose to take control again. In a down trend this can mean a day or two at the start of the week when the market attempts to rally.
In a strong downtrend it is rare to see a close above the highest high of the previous two days. That level is ES 707 for today and is also just below major resistance. If the significant sellers are offered price early in the week anywhere near that level it may be enough to get an aggressive response from them.
Value building above that level would likely indicate higher prices in the short term and I wouldn’t look to short.
The more ES prints below 690, the greater chance we’ll see another new low without much of an auction higher.
With significant buyers absent last week it is wise to eliminate the long side until they make an effective appearance.
