ES review & plan
Yesterday's move higher was on less volume than the prior few days, though still reasonable at 1.8m contracts and 3.9bn shares on NYSE. The pop following the FOMC minutes saw initial volatility, as is usually the case, but was supported by further buying and balancing within the rejection area from the 09/17 FOMC day.
The daily chart above shows the move higher overnight has tested the bottom of the range the market was in for most of the year. Holding above the 20 day sma is a bullish sign for longer term traders and we may see a pullback to test that now the bottom of that range has been tagged, which is also a composite LVN.
The 240 min chart below shows the value area of the current range, which is currently being tested at the top. The bullish momentum and decent volume on the rally so far leads me to believe we'll see a continuation higher to find sellers. Short sellers are adding momentum as they are stopped out, so I need to see evidence of buying drying up and sellers able to regain control before considering shorts at the moment.
If we see a break, the first area to retest is the area highlighted below, ideally down to the overnight high from yesterday. If buyers support that area then longs remain in control to carry on the rally. Failure under there and a move into the range from Wednesday could see rotation lower and risk a long liquidation break.
The overnight range so far is 1998.75-2014.00 versus settle at 2006.50