The Battle at the 18-Day

The U.S. Dollar was down today - nearly a full cent, as the FED pumps to try to turn the contraction around. GOLD was down. Crude Oil was down, and - even with this - stocks were down. Did I mention the U.S. Dollar was down?!

The daily chart of the ES Futures is below. Price initially waged a battle at the 18-day SMA, mostly in the after hours, and then price settled below that line - leaving the market with a negative bias.

ES Futures - Daily - Tag of 18-Day SMA

This increases the probability somewhat that a Minor 4th wave (non-overlapping) might be made as part of an impulse wave downward.

You'll also note that the upper daily Bollinger Band is about to cross under the 100-day SMA. If price should rebound at some point, that level would likely offer formidable resistance to further upward movement. We are not there, yet.

From the slow stochastic, we see that it became un-embedded from being under the 20 level for three or more days, and when that occurred, price and the 18-day SMA tried to come together. That was the expectation, and it has been met. You will also note that the slow stochastic is no longer in over-sold territory. It has effectively worked off the old-sold condition.

Wave 5, lower, if it occurs, may not be easy to figure out. It might be a diagonal, or it might be an impulse, or it might be an impulse with a diagonal in its fifth wave. So, we'll do our best as the wave progresses to monitor for a new low.

The stimulus bill was passed today, pretty much as expected. And yet, this is how the market reacted. Oh, and did I mention, the U.S. Dollar was lower.

Have a good start to the evening and the weekend.

TraderJoe