By: Evan Lazarus
Short term traders should be keeping a watchful eye on the overnight trade as the Russell is setting up in a bullish consolidation pattern, which will most likely resume this morning. I have also included a quick snapshot of the hourly chart on the S&P index which shows an identical gap fill on a gap up. Active traders should watch the first hour to get an idea if this gap up wants to go higher.
The higher the market goes, the more short term overbought it becomes and you don’t want to get trapped buying longs on a gap up that reverses.
In addition, the market has stretched itself to the upside over the last 2 weeks and is in need of a rest. This gap up into prior resistance is an ideal place for that to begin.
