- Main Trend (weekly): neutral
- Intermediate Trend (daily): up
- Short-Term Trend (480&288min): down
On the weekly cycles, the market re-tested the resistance levels once more before being denied with authority. Again the resistance held cleanly on YM and was spiked briefly on ES. The directionality tool (white lines at the bottom of the charts) finally started to move down on both indexes which is a serious warning that the trend is changing. We did get a LRE (lower risk entry) for longs at the lows from Friday which shows that at least short term the market is oversold, so a near term bounce would not be totally unreasonable to expect. We need to be aware however that due to the large move, the market could drop further (and quite significantly) before the bounce (as it happened on the previous LREs for longs triggered on ES - highlighted on the chart).
The daily cycles provided again a nice “zoom-in” into the weekly cycles. The bounce from the 2nd support triggered (which corresponded with the test of the mcm-MA on the weekly) was very strong and already reached an area where a 2nd END resistance could trigger (at the highs of last week). The Brexit vote was the main news behind the huge daily bar from Friday which spiked directly through support and triggered a LRE for longs at the low (same like weekly). The price is still below the support level and it is important to see how the market will behave when (or if) it will come back to test it. If the market comes back above it and we do not get a 2nd END resistance trigger at the previous highs, then a bigger bounce might ensue. If it cannot come back above, that could have very bearish consequences since it could be the start of an impulse down.
The 480 and 288min cycles were in down impulses and they attempted to reverse them by breaking above the resistances triggered in the form of a bearish retrace (BR) on 480min and a 2nd BR on 288. The up impulses never confirmed (mcm-MA never broke above the break-out level) as the market reversed strongly on the Brexit news and found a bottom marked by support and a LRE for longs on both cycles. The bounce from there touched the mcm-MA on 480 and spiked it a bit on 288 before reversing. Where this down move ends will be telling for the near term direction and the support levels area is key to watch. The current move is close to qualify already as a back-test of the support levels, however the market could test them better and even make a new low by spiking below.