We've seen a strong rally off the key daily Fibonacci price support levels. Is this sustainable? Let's take a look at a current chart of the ES September contract.

Click on image to enlarge!

I like to focus on the 45 minute timeframe since it shows intraday trend as well as levels which have an impact on the daily pattern.

The rally started at key .786 retracement support, 1120.50. That was the level in the way of making a new daily swing low. Now there’s a great deal of new support directly below price. But in order to confirm that we’re going to flip back to a pattern of higher highs and higher lows, a long side pattern on the daily charts, we’ll need a break of the opposing .786 retracement resistance close to 1188. That retracement was derived from the August 17th high to the August 22nd low against the key 1120.50 support. Until that resistance breaks there’s the strong likelihood that price will consolidate between those 2 bold retracement levels. A break of the res would call the target at 1230.75 into play, essentially committing this market to a shift in pattern to upside on the daily chart too. That’s why this resistance level is key and may put up a struggle.

If we get that break of resistance, we’ll have a solid upside target to shoot for and also we can focus on support holds on pullbacks from that target for additional long side entries, even longer term!

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