U.S. markets remain fragile with last week’s price action on the daily chart for the YM emini futures contract closing with a wide spread down candle on high volume, which has been followed by a gapped down open at the start of the new trading week. That said, gaps do get filled and this is certainly the case so far in today’s trading session, but there are several important technical issues to consider and which help to confirm the longer-term outlook.
First, we have resistance building in the 26,500 area as denoted with the red dashed line of the accumulation and distribution indicator. This indicator for NinjaTrader increases in thickness each time a level is tested and holds, and so gives us a clear visual signal of the relative strength of the resistance (or support). The thicker the line, the stronger is the region. And as we can see from the chart, this region has been tested multiple times, all of which have failed to hold.
Next, consider the price action and associated volume of June 16 with the extreme volume and weak price action as the big operators sell into weakness, which is then repeated the following day thereby confirming the weakness.
Then, note the selling volume under the down candles, which have small wicks confirming the strength of the selling.
Finally, the trend monitor indicator at the bottom of the chart is transitioning to red as sentiment transitions to bearish. And note we also have a low volume node immediately below, so the market is likely to move through this swiftly and down to a possible platform of support at 24,000 as denoted by the red dashed line of the accumulation and distribution indicator, and if this is breached, the volume point of control at 23,350 is the next logical pause point.