ES continues moving up, based in part on support from the Fed. The C top target remains intact as long as 1130-26.50 range holds up.
Yesterday the surprise rate cut from the Bank of Japan and better-than-expected results for the September ISM services sector report added fuel to our market. The higher price is soothing concerns about a double-dip recession and seems to be anticipating a better employment report on Friday.
As long as internal upside momentum remains strong the price will only go up. There is still a chance the C top target 1164.75-1162 can be reached today before price pulls back a little. The upside move could last until Friday or next Monday if 1142 holds the price up and prevents ES from filling yesterday’s gap.
Trading strategy for Wednesday
ESZ0 Intrady chart – 60-minute bars
On the 60min chart ES moved up to hit the top range of the uptrend channel. Overnight the price may pull back to the area above 1150 to search for support. 1145.50-1146.50 is the major weekly range breakout area.
If we hold above that range look for a further rally to 1158.50-59.50 (short entry) or higher up to 1164.75-62.00 (short entry). But remember: the buy-side risk will be increasing as the price keeps going higher towards the 1165 area.
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