Bond trading leading SP500 for continued direction

Bond trading, if you look at the detail out lined in this chart you have some classic technical trading patterns and some interesting support and resistance.

First Consideration: the supporting trend line has been violated and price is settled below the trend line.

There is a HEAD AND SHOULDERS pattern where the extension  would take price to 131.435 area which is close the the 200MA.  Another classic trading indicator.  Notice the price failure at the head formation and the volume.  A good tell for the experienced trader.

The catch: Presently the bonds are testing the support on the first move down from the lower high, if buyers move in here we could see a test to the 136.12 area and then the continuation, giving us again a lower high leading to lower lows. and continue the move to next major support.

Now Let’s look at the SP500 emini futures.

S&P500 Emini Futures Daily Chart with overnight.

There is a long term price projection for the S&P500 emini futures contract of 2040-50 from an equidistant move off of the support at the swing low when it broke the 50MA.

We have seen a 3 day move up off the supporting trend line with a the possibility of a re tracement to the previous support.  If not the touch and continue off of the supporting trend line with a continuation to 1990 and possibly 2000.

This will be a little easier seen in the lower time periods as larger time frames will give a better perspective of longer term trends and keeping in a swing position.

a quick note if this is a continuation with a break out above the present 1975 swing high, it would be a stronger move if it had an increasing volume pattern on the breakouts.  We can see the approaches to previous highs have pushed through in the lower volume overnight sessions with choppiness in the first hour of trading and then the light volume in a bullish channel fishing out intra day traders stops.

Emini futures trading the S&P500 240 min chart.

The Supporting trend line in red is showing price action as the overnight sessions have consolidated and led to premarket break outs.

The previous days have set up into bull flags with consolidation creating a zone where price takes off and completes the daily range.  The last three daily  pushes have been on decreased volume with  a breakout by the market makers at over 700,000 contracts executed to move in to this direction.

Watching for this to move to the 1990 resistance, but would not be surprised to see some pull back before continuing its way up.

This is the summer session of trading, and many traders (like myself) are taking off on holidays.  I am looking for decreased volume over this next 6 week period.

Trade what you see and remember to manage your risk first.  If you are not familiar with the market, don’t trade, this extremely high risk.