MCM Newsletter – Outlook for Week 30 May – 3 Jun

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): up/neutral
Details:
The initial decline from the triggered resistance level on the weekly cycles has stopped when it tested the mcm-MA and the market managed to bounce from there. Now, price is close enough to the resistance level to be considered a back-test (highlighted on chart). What happens here will be key for the main trend direction, with the normal expectation being for resistance to hold and market to have a more pronounced correction. As it can be seen from the previous resistance levels, it would not be totally unexpected for the market to either head directly lower or challenge the resistance a bit more before that. The directionality tool should be watched closely for signs of down movement as well. Interesting is that YM is underperforming ES, being about 200 points below the resistance level, while ES is only 7 points.

Weekly Cycles

Weekly Cycles

On the daily cycles, we can see that the mcm-MA on the weekly also had help from the daily when it held. Namely, the market back-tested the bullish retrace (BR) support which had triggered a while back. That back-test showed that not all is as bullish as everyone thinks since the support held with difficulty and was spiked below. However it did hold in the end and market bounced strongly from there. Now an END resistance to that BR could trigger basically any time at these levels. It can also be seen even better than on the weekly cycles how significant is the YM underperformance - while ES went clearly above the previous high, YM did not and is in that general area. The mcm-MA on YM also turned red and we started to get some LRE (lower risk entries) for shorts. As previously said, once that END triggers, that would signal a possible unwind of the up impulse and in the context of the weekly, a larger down move would be expected. There is also the option that a 2nd BR will trigger and require a 2nd END, which would need more back and forth movement before the bigger correction.

Daily Cycles

Daily Cycles

The 480 and 288min cycles show the effect of the big move we had in the past 4 days. 480min actually broke into an up impulse, while 288 had a larger regular wave which triggered resistance at 2092.75. Considering the up impulse on 480, if the market sustains the move past this level and starts an impulse also on the 288min cycle, then we would have to acknowledge that the bounce would have further to run. However, the resistance on 288 might still hold, despite of it having been spiked briefly, so keeping an eye on that level in the next few trading sessions is important.

288&480min Cycles

288&480min Cycles

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