July 18, 2011
The uptrend remains under pressure as the market struggles with ongoing issues including debt in Europe, the debt ceiling issue in the U.S., and recent news about banks failing stress tests. This has led to a choppy 5 day sideways consolidation in equity markets. The recent range is 1302 to 1327.75 on the ESU11 futures contract. These will be areas to watch should the market begin to move from this consolidation area.
In short term trading it is often best to allow the opening range be established and then allowing the market to indicate direction by breaking one end of this range. The initial 30 minute or 60 minute range can be used. The ESU11 also closed Friday with an inside day which often precedes range expansion. An inside day simply means that all of the day’s trading took place “inside” the previous day’s range thus it had lower highs and higher lows. Inside days are another sign of consolidation and the market storing up energy for a bigger move.
