Sunday, March 27, 2005
Big Picture up Close
This chart is a close up of ES, with what might look to some like excruciating detail. The idea here isn't to be elegant, but to chat about a couple of methods and suggest possibilities.
click to open a larger image in a new window
20d BOLLINGER BAND EXTREMESThere are a number of methods that use 20d extrema. The signals shown here applies Bollinger Bands to each of the 20d Low sma (simple moving average), High sma, and 20d sma and places a dot where price crosses over the 2 standard deviation band (upper band for 20d H, lower band for 20d L, and upper or lower for the 20d).
There are two overlapping 20d L and 20d "buy" signals at this low. Those familar with BBands know price extremes can ride the outer band and be a sign of the strength of the trend. Thus, corroboration should be used, eg, an oscillator, shorter term moving average, or other indications.
The two oscillators are OS, so their reversal would add confirmation, as would a reversal of the 9wma shown on the chart.
TRENDLINESI consider Andrews median lines "fancy", but powerful, trendlines. Price fell out of the longer term Blue fork and, as I show it, is now in the range of that forks "harmonics", ie, mirrored extensions of the bisect, in this case at 150% and 161.8%. Price could well go to 200%, but that's getting ahead of things.
Price tested and is rejecting the Black bisect, right at the Blue harmonics, which creates a pivot for the Green fork. The Green and Black forks are right on prior Low Closes (1166.25 and 1174.31).
Finally, simple TLs are both points of support and resistance.
BREADTHThe McClellan is not strong, but shows signs of a reversing its prior slide. Volume during the decline has been moderate. A capitulation isn't necessary, imo, for a short term low.
POSSIBILITIESLongs are favored with downside risk to 1164 (prior low) and 1155, the 200% Blue fork harmonic. The possibility of congestion may be about equal. Because price has tipped positively, what happens between 1185 (prior low) and 1190 (TL/Bisects) will be important.
Finally, comment on the candles. The Reaction Zone is also in the shadow of Tuesday's (3/22) long candle. That 3/24 closed above 3/23's open is bullish. As seen in
this 15m chart, volume is positive (the yellow lines), and with a positive close on Monday, the daily pivots (blue lines) will have reversed.
Labels: chart-analysis
