E/J: at major resistance & a pivotal level.

Thurs 18th Sept

The E/J must get the ‘quiet achiever’ award for this week. It has continued on with the rally it started last week and, after a short dip at market open on Monday, resumed its bull run as evident on the 4hr chart below. This 2 week effort has netted 400 pips but the E/J might be about to run into some considerable resistance as it approaches a pivotal trading level. 

E/J 4hr: bounced off 136 last week and has run for 400 pips:

EJ4

The daily chart shows how the E/J is now butting up against a major triangle bear trend line, the psychological whole number 140 level and, just above current price, is the pivotal 61.8% fib of the major 2008-2012 bear move: 

EJdaily

The weekly chart shows the significance of any potential triangle break and it would most likely confirm the ‘Bull Flag’ I have been seeing here for months:

EJweekly

The monthly chart shows how price has been consolidating within this triangle pattern under the 61.8% fib for a number of months now. Price rallied above this fib level in December last year but couldn’t hold those gains. Since then, the E/J has been consolidating in various triangle patterns under this key level but looks like it might be about to make another attempt on this again soon:

EJmonthly

The 61.8% fib level of any move is a major demarcation point as it is often noted as the point of a change in trend and, thus, is worth monitoring. This fib sits near the whole number 141 level for the E/J. Any bullish continuation above this 61.8% fib would suggest a move up to the 78.6% fib near 154.

The E/J is trading above the Ichimoku Cloud on the 4hr, daily, weekly and monthly charts which is bullish and supports continuation.

Summary:

  • the E/J is currently testing major resistance offered by the bear triangle trend line and the 140 level. A break and hold above this region would suggest bullish continuation.
  • the E/J is also currently just under the pivotal 61.8% fib of the 2008-2012 major bear move. A break and hold above this 141 level would suggest bullish continuation as well.
  • traders need to monitor the triangle bear trend line, the 140 level and the 61.8% fib near 141.
  • I would be looking for a daily, and even better still weekly, candle close to confirm any bullish breakout.
  • Bullish continuation above the 61.8% fib would suggest a move up to the 78.6% fib near 154.

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