Can Bull Train Break 2815?

Given the context of the Sunday night gap up, Monday’s session was all about maintaining the overall trend with the expected backtest that took place. The market made an overnight high at 2814 on the Emini S&P 500 (ES) that couldn’t break above the 2824 resistance level, so it started the slow grind down towards the 2764 gap fill region during regular trading hours, per expectations. The intraday bulls managed to temporarily "sticksave" at 2773.50 back into about 2790 to wrap up the range.The main takeaway from this session is that market is currently following the plan towards the Friday gap fill level and more upside is to be expected given the setup. Essentially, our expectations have not changed since the weekend report.

What’s next?

Daily closed at 2789.75 and it was a long legged doji session with day’s high at 2814 and low at 2773.50. For this shortened week/month, all dips are still considered buyable when above 2720 as that’s the current daily trending support from the prior week which also represents the upper half of the range. The gap fill level is located at 2764 from Friday and would likely be the next battle contention if the bulls allow the backtest to complete tomorrow.

If you recall, heading into this week, we discussed as long as price does not break above 2824 immediately, then it’s expected we get a fast gap fill back to around 2764 in order for the BTFD (buy the f'in dip) crowd to be relieved from short-term overbought conditions and continue the trend. Judging by current momentum, the earliest indication for the bull train to be viewed as immediately ready going towards the 2850-2875 continuation target zone would be a break above 2815. Either way, we’re looking to board a train ride towards the 2850-2875 until the setup/pattern invalidates due to the great risk vs reward. At the moment, the market is following the 4-hour white line projection, so it continues to be our roadmap and thesis from the weekend report.

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Ricky Wen is an analyst at ElliottWaveTrader.net, where he writes a nightly market column and hosts the ES Trade Alerts premium subscription service.