MCM Newsletter – Outlook for Week 22 – 26 Aug

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): up
Details:
The weekly cycles are in an interesting position, as ES is close to confirming the up impulse, while YM is still a few weeks away from that. The mcm-MA on ES is now crossing the resistance level and even if YM is under-performing, both markets have moved enough above the resistance levels to rule out a mere spike above. If it would not be for the structure of the daily cycles, a prolonged up move as a result of this impulse would be normal expectation.

Weekly Cycles

Weekly Cycles

On the daily cycles, we had a significant event last week. YM had triggered a new support level just below the 2nd END resistance and on Friday, it triggered the 3rd END resistance to that support, marking the complete unwind of the massive up impulse which started close to 16,500. That is a very important level and because it is a 3rd END resistance, it has lower than normal odds of being broken above. The up energy of this impulse fully dissipated at this level, and the normal expectation is for a move in the opposite direction (i.e.down). ES is in a slightly different position since it never triggered the 3rd support and END higher, as the market never moved back below the 2nd END resistance after moving slightly above it. However the market never moved significantly above that resistance level, so coming back below it would not be surprising. The terminal status of the up move on the daily is what makes unlikely the start of a true impulse on weekly, despite the near confirmation on ES. However, if the daily cycles manage to break the resistance levels against the odds and start a nested impulse up, that would be a very big warning that a new big up move is coming, since we would have impulses up on daily and on weekly. So how the daily cycles shape up becomes key for defining the intermediate term direction.

Daily Cycles

Daily Cycles

480 and 288min cycles are still in the area of the plateau which we were mentioning last week, although the market did manage to make a 2-3 points higher high. 288 is in the unwind phase of a new up impulse and already had a 2nd END resistance very close the the highs. 480min had a BR support very close to the break-out level of the nested impulse up, which gave it higher than normal odds of holding; which it has done so far and we are looking at the next END resistance (higher) to mark a potentially significant turning point.

288&480min Cycles

288&480min Cycles

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