The great thing about channels is that they tell you quite precisely when a trend change has occurred. The falling white channel seen on ES was tested just prior to the open yesterday. A simple smackdown on VIX and it was off to the races.
As we noted at the time, ES’ 10-DMA had dropped to the level of its 20-DMA. Despite a huge ramp job, a bearish cross has indeed occurred.
On the other hand, we have both an FOMC meeting and OPEX this week. On top of the bullish channel breakout, these events seldom fail to produce a rally.
Which will prevail?
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