ES Update 02/07

Big relief rally on late night Eurozone announcement. The risks to the downside are “is it enough” as previous relief rallies faded once the details became clearer.

I created support and resistance levels using a 4 hour chart and placed them on the longer term chart. I have given explanations for why they exist. Support once broken becomes resistance and vice-versa.

Current price = 1350

Some context: May 04-24 – on the 4 hour chart price spiked down to 1346/1347 however the real defense area was 1352/1354 (R1) and the upside was 1380/1382 (R4) – it was very choppy in this range in April. Price did gap through it on the way down after a poor NFP number but I don’t think it will go back up as easily.

Support below here

S1. 1337
S2. 1328
S3. 1307
S4. 1302

Resistance above

R1. 1352/1354
R2. 1364
R3. 1376
R4. 1382
extended 1396

Support levels:

S1: 1337

Current Range goes back to 05/07-05/11 – the 4 hour chart shows long wicks showed aggressive buyers at 1337/40 in the past as a support level (once this support broke the next stop was 1280.75). (This chart also shows R1).

S2: 1326/1328 – 1326.25 was a pullback Low on March 6 and capped the upside a few times until a breakout last week. This area is important to watch as support. Failure here will require another defence of 1300/1307 from last week.

S3/S4 The epic battle at 1307/1302

Resistance Levels:

R1: even though price is here now I expect this area to provide resistance. June high had resistance was 1352 – price bounced there before FOMC and sold from 1357.

R2 1364.75 was a resistance in February and is key now.

R3: May range top 1376/1382 (see image 2)

R4: 1382 was support at the top with (extended R) 1396 a strong Resistance.


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