Chart Chatter: $ES

Welcome to Chart Chatter where we discuss various technical charts we find of interest. We cover indices, signals and stocks on different timeframes highlighting different technical techniques we use over time. We’ll focus on key observations we find relevant which readers may find of use for their own trading.

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2 time frame charts on the $ES.

Firstly the weekly chart. $ES has formed a very tight rising wedge with little to no corrective activity since June as volatility compression has once again taken hold of markets.. In process $ES has pressed against its 2016 trend line multiple times from the underside. This trend line was broken to the downside during Q1. There have been 2 attempts to break above this broken trend line both of which have been rejected. One in August and one in September:

$ES is remaining above the weekly 5 EMA and the trend remains unbroken. However recent new highs have come on a pronounced negative divergence and the rising wedge is ultimately a bearish pattern if broken to the downside.

A close below the weekly 5 EMA would be a red flag and a break of the lower trend line could target a larger risk zone to the downside as outlined in the pink box.

On the 2 hour chart we can observe shorter term trend lines of relevance:

Here too we can observe a rather precise interplay of trend lines. A support trend line was broken to the downside in September and recent highs on $ES retested this broken trend line and has since rejected there. A further supporting trend line has formed and currently has support near 2900.

$ES remains in an uninterrupted up trend, however 2 trend lines have broken to the downside on multiple time frames and have proven to be resistance.

Lower channel trend lines are offering support on any downside. Until these break with confirmation the trend has to be assumed to be intact.

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