The coming week may provide traders with a really nice reward to risk trade. The stock indices are at Key Reference Areas from an Auction Market (Market Profile) perspective and therefore are likely to move sharply away from the 1325-1331 area (basis the ES). Trading that began in the Globex session and ended with the abbreviated day session holiday hours saw the ES and other indices close near their lows. The DAX and EuroStoxx also gave up early gains to close near their lows.
A bullish resolution would be signaled if the indices trade above their Sunday evening Globex highs with potential into the KRA above the present level of the ES at 1350-1364. A bearish resolution would be signaled on a trade below Friday’s lows with an initial and probably minium target of the May 21 lows.
The present market has a rough analog with last summer’s market as can be seen on the chart below.
There is plenty of room to the downside from the perspective of a reading of NYSE Breadth and NYSE Up vs. Down volume as can be seen on the chart below.