US Indices in Congestion
Gail Mercer of Traders Help Desk - InsideFutures.com - Fri May 25, 9:42AM CDT

This article was originally published on Nadex.com.

The US indices have developed a congestion range on the daily charts, while the weekly charts are indicating that price is testing for potential resistance with the Stochastics indicating that the markets are overbought.  With Non-Farm Employment Change next Friday, will the US Indices hold this pattern or break out prior to the release?

E-mini Dow Jones

The daily e-mini Dow jones has formed a potential congestion area between 25043 (white dot) and 24474 (blue plus sign).  Price has tested both the ATR and the white dot twice but has been unable to break through either area.  On each approach, regardless of whether it was above or below, reversal bars formed on each test and yet price failed to break through either area.  On the last approach to the line of white dots, trend divergence on the Stochastics appeared and yet price failed to break through the support area.  Price then moved down to within 100 points of the ATR and promptly formed a reversal bar.  Today may be a critical day if price manages to crash through the resistance area at 25043.  The current price bar would need to close above the area to signal more upward movement next week.

US Indices in Congestion emini Dow JonesE-mini Nasdaq

The e-mini Nasdaq daily chart indicates that price barely closed above the line of white dots but immediately formed a line of red dots at 7012.25.  However, when price returned to test the ATR stop at 6808.50, a new reversal bar formed.  Again, today may be critical if price manages to close above 7012.25.  With the Stochastics indicating hidden divergence on the last low, price may have the momentum to finally break through resistance and close on the high this afternoon.

 

US Indices in Congestion emini NasdaqE-mini S&P 500

The e-mini S&P 500 shows a pattern very similar to the e-mini Dow Jones -- a line of white dots have acted as resistance (2745.25), while the ATR has acted as support (2691).  Although reversal bars have formed at both the top and bottom of the congestion area, they have not been able to gather sufficient momentum to break through either area.  Will today be the catalyst?  Currently, a three bar bullish candlestick pattern is developing but it will not be complete until the markets close today.  However, if price does manage to close above the resistance area, then we could see further advancement in price next week.

 

US Indices in Congestion emini SP 500

 

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