Written By Basilio Chen

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

Prices are now significantly exhausted from this down move that started September 19 at 2013 to 1863 (150 points down in 26 days).  We are looking for a breather and reverse to LONG at the first opportunity unless prices go significantly below 1860.  Clearly this cycle that started UP on August 14 to the peak on September 19 to today, has shown different characteristics than any other cycle during the entire last 2 years.  For one, the momentum of the upmove has changed the future price action outlook, meaning a new theme is evolving.

(while it took 36 days going up and 26 days to come down breaking below the starting point).

ES Oct 14 2014 60 min Exhausted

The 760 min chart shows how prices hit further down the normal channel  (45 degrees) to a deeper channel (60 degrees) while breaking the prior low of the start of the cycle in August 14.

ES Oct 14 2014 360 min Oversold

Looking at it from longer term perspective  (Daily), the UpTrend started late in 2013 reached a terminal point with a move than widened the Bollinger Band (BB) while touching the 200 MA.  All timeframes are now oversold.  We expect prices to move UP toward 1940-1950 range first.

ES Oct 14 2014 Daily OversoldES Oct 14 2014 Daily Oversold Closeup