MCM Newsletter – Outlook for Week 4 – 8 July

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down
Details:
On the weekly cycles, the market made a low below the “Brexit low” which was greeted by a new LRE (lower risk entry) for longs. After that the market rallied, giving credit to the 2 consecutive LREs, and is now close to testing the resistance level once more. The directionality tool keeps moving down and the action next week looks critical to see if it will bounce back up or continue its slide (which would be bearish).

Weekly Cycles

Weekly Cycles

The daily cycles show nicely the huge 4 day rally following the lower low registered on the next day following the Brexit vote. The market bounce right back through the broken support and bounced enough to an area where it’s possible already for a 2nd END resistance to trigger. That doesn't mean the market cannot go higher though. It’s interesting that the mcm-MA on YM changed color and a LRE for shorts was triggered on Thursday.

Daily Cycles

Daily Cycles

As anticipated last week, the 480 and 288min cycles spiked below their END support levels before the market came back and rallied strongly. The big rally triggered new resistance levels at 2075 ES, which were broken and 288 is now close to confirm its up impulse. If this breakout turns into a real impulse on both and if the impulse holds any back-test, then the bounce could go significantly higher. The next 1-2 trading days appear to be key for that, especially considering the directionality tool which is at its maximum value and if it turns, it would be a clue the bounce is done. The even shorter time-frame cycles like 60&135min or even 5&15min will also be important to watch for early clues about a potential turn or further break-out.

288&480min Cycles

288&480min Cycles

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