Macro micro trader

Last couple weeks have been good for the bears and good for us as well, as we expected the weakness and it ensued. What happens next and how to place our bets is something we’ll see in the post today:

ES (4H): While the carnage has been going on, as we have been talking about, ES has been forming this falling wedge on 4H charts with positive MACD divergence. Although I’m not nibbling into longs on ES yet, but watching this development closely.

ES (Daily): On the daily, while it has continued to fall after that double top and upper end of the channels (orange and red), now it has given up 20EMA and sitting just above 50 EMA on the daily. Apart from 50 EMA as a support, the close on Friday was a bullish hammer!

ES (Weekly): There is one key thesis that I have been holding onto since last year – this market is driven by weekly charts. While the fall last year reversed after falling briefly below 200 weeks MA, the rally so far has been consistently been above the key 20 and 50 EMAs and I would assume the price to try and retrace all the way towards 20 EMA in this leg of the correction/sell-off – 4350 currently.

NQ (4H): Just like the ES even the NQ has been falling within this bullish falling wedge with positive MACD divergence. Just not yet!

NQ (Daily): The sell-off in NQ has been more severe than the other key indexes. Friday’s close too, although closed just above the 50EMA, it doesn’t give any conviction to go and buy. Nope, not buying this one just yet.

NQ (Weekly): The fall, so far looks normal and looks like even this one is headed for the 20EMA before any meaningful bounce or a continuation of a rally.

YM (4H): Among all the key index futures, only the YM (Dow Jones Industrial Average) seems to be sustaining so far. While all have been forming falling wedge and a sharp one, YM is forming a channeled bull flag.

YM (Daily): Inspite of that double top formation, YM hasn’t yet fallen as sharply as other key indexes. Moreover, it has been able to hold on to its 20EMA reversion and thats a positive sign! Just one change of perspective though which I didn’t quite see earlier – Formation of rising wedge on the daily. While that risk is still there, I would only turn bearish once YM throws in the towel on the 20 and 50 EMA. Till then, I’m bullish and holding on to my longs that I entered on Friday.

YM (Weekly): On the weekly chart too, YM has a lot of catching up to do with the other indexes. Holding just above the breakout point and not far off the all time highs too.

RTY (4H): The sell-off in the small cap index has been sharper and that’s not a comforting sign. Only solace is that it is forming this bullish falling wedge on the 4H chart but no MACD divergence yet.

RTY (Daily): 20 EMA gone, 50 EMA barely holding up and Friday’s doji isn’t giving any sign of confidence either.

RTY (Weekly): RTY has just fallen under that trendline resistance that it broke out of in its journey up. Challenge for the bulls would be to hold on to 20EMA and cross past this trendline resistance again.

Conclusion: For the bulls, YM looks good but all the other key index futures aren’t looking healthy yet. Although there would be bounces along the way, but am not too confident if those bounces would be sustained just yet. Watchout for the weekly 20EMAs and 4H wedges/channels on respective charts before nibbling into the longs.