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S&P 500 futures shortening of the thrust with a rising wedge
S&P 500 futures (ES) slid around 1% in the London session in response to IMF warning of possible severe global recession ahead due to COVID-19.
14 Apr 2020 recap — on daily chart, S&P 500 futures managed to overcome the psychological level at 2800 and close at 2843, which is a bullish sign. Yet, shortening of the upward thrust is spotted, especially in H4 timeframe, since the low from 4 Apr 2020.
A rising wedge pattern is formed and is near the end, suggests the time has come to pick a direction to either break down the wedge to retrace to 2700–2730, or to rise to the overbought area before starting any reaction. Although the rising wedge pattern is bearish in general, it is better for us to assess both scenarios so that we are well-prepared to trade in either scenario.
So far, supply is not manifested. It is important to judge the character of any reaction together with the volume to gauge the direction ahead.
Bias — neutral, waiting for ES to resolve from the rising wedge pattern.
Key levels — Resistance: 2850, 2900 Support: 2800, 2700–2730
Potential day trading setup — look for a test of the support at 2800 to initiate a long entry. Should it break down 2800, look for weak rally up for a short entry.
