The equity markets continue to deal with international unrest which has pressured the price of crude oil up over $104. This will be an important factor to monitor as it will likely impact trading overall. We are going to continue to observe the market and wait on a breakout before placing our next trade.
The market is forming a triangle consolidation. A review of the 60 minute SPY chart shows this triangle pattern well. The thrust down on February 22 was met with a surge back up in price. Since the market is making high lows and lower highs thus forming a triangle. These are breakout patterns as energy in the market is building up and eventually either the buyers or sellers will emerge with the stronger hand.
As a trader you do not want to chase price ever, but especially in a consolidation period. Price will tend to challenge both ends of the trading range and test support and resistance. The markets tend to test prior swing highs and prior swing lows and you want to trade accordingly. Be careful on breakouts and trading continuation patterns as these are more likely to fail.
We are watching 1311 on ESH1 as potential support and 1328 to 1330 as potential resistance. We would expect the market to be fades if either of these areas is tested in early trading this week.
