New Top, Old Resistance: Mixed News Question Bullish Supertrend

Elysian_Mind Updated   
CME_MINI_DL:ES1!   S&P 500 E-mini Futures
New Top, Old Resistance: Mixed News Question Bullish Supertrend

Dear Esteemed Traders,


Zooming out on the chart, ES hit a level that might be a resistance since January 2022, formed by a previous top. Historic tops often act as a resistance. Alone this would be a weak indication, but the price managed to hit that level at the same time when it also met the rising resistance from historic bottoms. See the red line on the chart.

I can observe double bearish signals on a bullish super trend, in which the price seems to have crossed down together with the EMAs in the previous month. I wouldn't call super trend bearish yet, but the so far strong bullishness of it became questionable.

MACD made a bearish cross and made a journey towards the bearish side of the indicator below the price chart.

RSI went extremely negative after an extended period spent in the upper half of the indicator. It means that ES might have been overbought, and the market signals the start of a correction to this overboughtness.

The possible correction move paired with a volume that matches the buy volume candles of the mentioned rally. This volume profile further powers the idea that the people who have been buying ES since October might feel the level to take profit on their investments.

The Money Flow Index (MFI) at the bottom and Bull-Bear Power (BBP) above it share the bearish view. BBP isn't too bearish, but it's been showing a weakening bullish power since December.

Finally, the $4736 support seems to be holding up the market from crashing. If the support breaks, the price can fall to the next support. I observed a support of around $4600.

These are the analytics, I found, but let's consider news trading.


The Federal Reserve has signaled its intention to raise interest rates in an effort to combat inflation. This could weigh on stocks, as higher interest rates can make borrowing more expensive for businesses and consumers.

Recent economic data has been mixed, with some indicators showing signs of slowing growth. This could raise concerns about the health of the economy and further dampen investor sentiment.

Earnings season is underway, and some companies have reported disappointing results. This could lead investors to expect lower earnings growth overall, which could put downward pressure on stock prices.

In total, I wouldn't call ES straight bearish, but I claim the bullish trend to weaken and I'm looking for shorts below the $4736 support line.

Trade active:
ES is below the support line.

I wouldn't believe the support is gone.

However, I'd add a higher probability to the bearish scenario playing out now.
The US economy is facing high inflation, driven by supply chain disruptions, labor shortages, and strong consumer demand. The annual inflation rate reached 7% in December 2023, the highest since 1982. The Federal Reserve has been raising interest rates to combat inflation, but this could also hurt economic growth and corporate profits. The Fed is expected to hike rates four more times in 2024, reaching 2.5% by the end of the year. Higher interest rates could reduce the present value of future earnings and dividends, making stocks less attractive relative to bonds and cash.