Now that we’ve rolled to the December contracts on the major stock index futures, it’s time to take a look at a very interesting chart; the daily Emini Russell Futures:

Click on image to enlarge!

There have been several support breaks pointing to the downside target extensions in green. Each time this market attempts to rally, price holds at key resistance and heads towards that target zone again. The target at 559.50 is derived by multiplying the difference between the low on July 7th and the high on July 27th and then projecting this number downward from that high. Once the intervening .786 retracement was broken, the emphasis is on this target. The .786 retracement was at 600.70 and there was a close below this level on August 24th. On any bounce before the corresponding downside target is met, the resistance is amplified in strength. Price is relatively close to the strongest resistance factor; the .786 level at 649.90. Unless we see that level break, all downside targets are still in play and should serve to pull price to downside.

A glance at the 45 minute chart shows that we’re holding a good deal of intraday support and the pattern is currently to upside on the short term:

Click on image to enlarge!

Using the same principles described above, a break of the .786 resistance at 639.50 would target the 1.272 extension at 648.30. The important thing to note here is that the target on intraday just brings this closer to the key daily resistance level. If we should see a continued rally, the focus remains on 649.90 as the key to immediate daily trend!

For more from Mark including his “Chart of the Day”, visit MJBraun.net.