Wednesday, June 24, 2009

Midday Briefing: Awaiting the Fed Announcement

We see from the Market Delta chart (middle) how selling has begun entering the ES market after a strong morning, with the dollar moving higher versus the euro. A longer-term look (bottom chart) shows that the support from 6/17 and 6/18 is now serving as near-term resistance. I'll be watching that level closely going into the Fed announcement. Failure to sustain prices above that level would set up range bound trade between today's highs and the last two days' lows.

2:05 PM CT - I added the top chart of ES to show how strength in rates and the dollar led to steady volume at bid to exceed volume transacted at the offer price (bottom histogram) and a break of the day's VWAP (red line). Selling rallies that fail to take us above VWAP has been a worthwhile strategy so far, as we're accepting value lower relative to the morning trade.


Anthony said...

Dr Brett, is it important to consider overnight levels in /ES when looking at support/resistance?

Ariel said...

There's not only chart resistance at 913 SPX but also the .618 retrace to Friday high is at 910.46, already tagged. If that holds, then likely it's an Elliott Wave small 2nd wave pointing market to lower levels in coming days. Doesn't guarantee new lows this afternoon below yesterday's low, but likely tomorrow (so long as this EW pattern has sway).