I'm no expert but this looks more like a bearish descending triangle to me with support on ES at R1 1075/6 and Dow 10095. I also notice that the Dow failed to maintain its breakout from the long term 10 minute channel this morning. Not exactly a gap and trap but I bet a few bulls were expecting more follow through than they received. however if it does turn out to be a bull flag, breaking above 10140 again I think the target is around 10180 as you say.
Anyway I learnt a useful lesson today - don't hold overnights without guaranteed stops! Ouch.
Not so sure on the flag theory, though last week did set a precedent for a very long flags ( I think CM named it a "limo" flag).
My take so far is range bound consolidation, the bulls had the opportunity to take the cash index much higher on the open as futures were pointing to an equivalent c10160 on the Dow cash.
Have they run out of steam ??????
looking to trade a break of consolidation in either direction, though will be happier short.
Sorry folks I know I should keep these snippets to the chat room really.
Just one last point - ES 10 min chart now resembles a limo [(c)hartman 2003] bull flag (a long downsloping channel following a significant move up), falling boundaries currently at 1073/1077. Dow approx 10078/10108. Could trade the range or wait for the breakout I s'pose.
But I think if ES falls much below 1073/4, i.e. below the gap it just closed and the channel (flag?) bottom, then we have an "Oops" setup that will be sold into fiercely. This occurs after a gap up (or down) when the pric then fails to follow through and goes below (above) the previous day's high (low) by a few ticks. However I don't know if this applies after the market has been open for this long - perhaps it is more of a first hour phenomenon?
As we move into the close, note that this morning’s higher open may be followed by a close under yesterday’s close would produce an outside down day or bearish engulfing pattern.
This could be a very bearish sign and possibly point to that the market may have topped in a more significant manner.
For DOW the level would be 10042 and even a close at current levels nl 10057 looks dodgy, actually is a gravestone doji!
Here's the take, and we were chatting about this at the party... News spikes almost always return to par. Let's consider today's action without the spike. What do we have? A close down of a few points. No big deal. Forget that news and get back to the overall picture. We are still in the main up channel, moving towards support. WE have to discount the indicators for a while as they are screwed and don't reflect the normal picture. We can only count on the price. RSI may well drop to sub 20, but we just need to follow the price action.
I don't see how anyone could(should) have done anything but stay short all day. Not a lot of TA on offer, save the bear triangle that gave a 20 point target of 10,080 and the pullback around the 64 to give 32 as a target... Still plenty of sellers on ES towards the close with a couple of big buys near the end so a mixed signal. I think there is room to move down to 9980 for support.
No realtime trading yesterday due to a dodgy internet connection, but managed to get a short on at 10195 when the futs opened and surged ridiculously in the early minutes of Monday morn.......
Then had a bad turn when I heard that the Nikkei had closed at nearly +3% but decided to hang on and placed a 100pnt cover limit on the basis that the US would 'sell the news'......!
Now see that I should have been more optomistic (or is that pessimistic if you're short?!?) - could have cleared 175 points....
Sometimes greed does pay....!(and hindsight is always a wonderful thing :cheesy: )
edit - I guess that we look for the usual pattern of lower highs/lows to confirm that we might be going into a downtrend, or having sampled the 10100's do we make a swift return there?!? Some US commentators are predicting a year end Dow close at over 10200......