E-Mini Poised for a Breakout – Where to look and how to react

Mar 25, 2015 | | Say something

Exactly one month ago the S&P hit its highest high since the inception of the index, this milestone as quickly dispelled as the index struggled to continue to excel beyond 2115. For the past 8 months there has been frequent retracements of a greater scale than observed historically. Generally with these “corrections” we can observe more drastic movements in price. For the day and swing trader, this increased volatility and price movement provides a lot of trade opportunity.

An ascending triangle pattern has been developing and today has shown that we may be on the brink of a breakout of this observed pattern which will open a period of very lucrative trading.

ES-Daily-3-25-2015

 

As seen in the daily chart of the E-mini (ES) the peaks and valleys have been rising with a shallower gap between the highest high and the lowest low as the markets look for a catalyst to propel it to a breaking point. This type of pattern is generally observed by a bearish breakout which could lead to substantial declines.

Before you jump into a short and wait for “inevitable” decline, think about realistic and tiered objectives for your next trade.

Look at near term supports and resistances; be observant to these possible level of contentions and set profit takes and stop losses accordingly. The most likely and closest point of contention below the formation break is going to be between 2040 and 2030. If price hits and exceeds to fall past, the next point could be as low as 1980.

If the price either retraces off of the bottom of the triangle, we could see a quick pop up towards 2100 before heavy resistance.

Unless there is a strong catalyst which propels price in one direction or the other, expect a bit of sideways volatility at the breaking points or at any of the supports or resistances.

ES-15Minute-3-25-2015

When trading, use your due diligence to support trades with reactionary candor. By using the Ruby system you can quickly jump on the trades signaled from the directionary triggers and when coupled with your knowledge of price movement expectancy, you will be positioned better for profitable trading with less risk on the table.

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