In last week’s post, available here, I pointed out how a price resistance pattern on the daily chart can serve as an alert to look for a more pinpointed entry on shorter term intraday charts. The Crown Pattern shown on the 15 minute chart in that article was the start of this recent slide on the CME Euro futures contracts. Since this led to an almost immediate 50 CCI sell signal on daily, it made sense to hold this swing for as long as possible.

The current daily chart shows that price has reached the 1.272 target extension of the swing into the setup:

Click on image to enlarge!

This is where we’d expect to see at least a pause, or perhaps a more significant bounce. It’s the psychological turning point where investors as a whole will generally consider that the market has moved far enough and needs to regroup. Swing traders would use that level to exit the short, or at the very least take off part of a position and tighten stops on the balance. If it triggers short again on a bounce, it’s always possible to add to the remaining position as well.

So to determine what’s next, once again we can step down to a shorter timeframe. Here’s a 60 minute chart:

Click on image to enlarge!

At the moment, all of the resistance derived from intraday swings is holding. Price is below the 34 exponential moving average, and the 50 CCI is still below zero. These are all conditions favorable for additional short side. On this timeframe, the 14 and 6 period CCI also crossing below zero would provide an additional short side trigger. More aggressive traders who have the time to monitor their positions closely can also enter with shorter timeframe triggers, then monitor this chart to confirm that there’s the potential for longer term follow through with a 60 minute trigger. The next target level is the green extension below, 1.3260, with the intervening support in bold as the “danger spots” on the way down. Without an additional daily target in play at this point, intraday support will be key. A break of this support area and the 50 CCI -100 line would indicate that the trade is free and clear for more downside.

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