E-mini Dow rallies

E-mini Dow 

After coming down and touching the support band from 15948 – 15978, the Dow has rallied over 200 points and is now looking to break above the next area of technical resistance around 16285 – 16292 on the chart. At this time, it is tough to identify a clear near-term direction bias in the Dow.  Technically, the market has been making lower lows and lower highs since 3/7, which would keep the negative bias in play until a rally above 16400; however, the strong start to this week could raise a bullish argument in anticipation of upside follow through. In either case, the previously mentioned resistance area around 16285 – 16292 will be an important level to keep an eye on. A sustained breakout above here would serve as confirmation of the current positive momentum coming off Sunday’s low; however, a rejection and subsequent decline back below 16180 would confirm the bearish near-term directional bias and could set the stage for a retest of the 16000 area.

March 2014 E-mini Dow, 30-minute bar chart, eSignal

Natural gas (NYMEX:HPK14)

After gapping more than .05 higher over the weekend, Natural Gas has once again come into contact with the Fibonacci Confluence zone from 4.533 – 4.540. Whether or not price will be able to surpass this level will be an important questions going forward as a failure from here would likely lead to price coming down to “fill the gap.” Also interesting to note is that often times after a breakout from a “neckline” in a head and shoulders top formation, price will come back to retest the neckline before ultimately failing and continuing lower. If this formation is indeed going to play out, than this recent retest of the Fibonacci Confluence zone is in direct alignment with the neckline of the formation (blue dashed line on the chart) and could signal the final stage of the technical formation. However, if the market begins to rally back over this Fibonacci c-zone and makes a new high above yesterday’s peak, than the entire formation would be called into question.

April 2014 Natural Gas, 30-minute bar chart, eSignal

Silver (COMEX:SIJ14

There doesn’t appear to be a clear-cut directional bias today in the silver market as price action has been relatively neutral over the past few weeks. Near-term momentum appears to be slightly bearish as the market has been making lower lows and lower highs since topping out on Friday. However, price is currently trading at an interested technical level on the chart. The level I am referring to is from 21.030 – 21.095, a technical area of structure that has served as S/R in the past. If the market is indeed going to change course and make a play to the upside, this support band seems a likely area from which to start. One potential strategy heading into today’s session would be to buy Silver with a stop below the low of the day in anticipation of a reversal at the previously mentioned support band. In the event that the market fails to hold above support and makes a new low, the path of least resistance is to the downside and the 20.600 level could be the next relevant technical pivot.  Until price begins to establish a well-defined directional bias, opportunities will present themselves on both sides of the Silver market. Continue to be patient and look for high probability trading setup with well-defined risk/reward parameters.

 

May 2014 Silver, 30-minute bar chart, eSignal

 

 

 

 

 

About the Author
Erik Tatje

Erik Tatje is currently a market strategist at RJO Futures and is the author of The Tatje Report, a daily technical correspondence. He has been an affiliate member of the Market Technicians Association since 2011 and has passed all three levels of the Chartered Market Technician (CMT) program. Erik can be reached at etatje@rjofutures.com or 312.373.5176. Learn more at www.rjofutures.com.

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