For US equity markets, and the YM emini in particular, it is the daily chart which has focused the mind over the last few weeks, and the prospect of whether or not the sustained resistance level that has developed in the 17,850 region would be breached, or whether this would ultimately cap the Santa Claus rally and bring it to a shuddering halt. The answer arrived in yesterday’s trading session, with the index picking up the bullish tone once again, and whilst the close at 17,862 was only marginally above this level, in early trading this morning, this sentiment has continued with both the Nasdaq and S & P 500 following suit. The strength of resistance in this region cannot be underestimated,and is one I have referred to several times in previous posts for the YM, and is clearly defined with the blue dotted line of the accumulation and distribution indicator, but once clear of this level, then we will have a defined and solid platform of support in place for a continuation of the longer term trend.
Ahead, we have little in the way of transacted volume on the volume point of control which continues to remain well below in the 16,150, so we can expect this to move higher in due course, should the market continue to break away from the current region. Furthermore, the recent pattern of pivots above and below the current region also help to define this area, and with the pivot low of Friday now in place this is also helping to push the index through this stubborn region of resistance. Should the index test the psychological 18,000 in the short term, and move through this level with strong volume, this will then establish the longer term bullish trend for US equities.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading