CME Update – September 14, 2017 …

A trading friend of mine asked my opinion of CME here at the current levels …

CME – Monthly Chart

The monthly chart shows what a nice run CME has been on … however, you always have to be aware of obvious pivot lows/highs as all traders would surely also be aware of these levels and be willing to trade against them.

The monthly chart’s relative strength vs the SPY ETF indicator (upper-right chart) shows that while price is making new monthly highs on this current run, relative strength is lagging.  R/S momentum is also flagging.

Overall, the monthly chart highlights the fact that this swing trade is long-in-the-tooth.

CME – Weekly Chart

The weekly chart shows how price is making new highs after a several week consolidation pattern … one of the key factors that determine how profitable a trader can potentially become is how good of entry points is that trader taking in his swing/positional trades.  I don’t really care to take swing trades on momentum break-outs … I will definitely take intra-day trades and possibly smaller positional trades on break-outs, but generally I like to take swing/positional trades in support on completed wave structures, and on consolidations that appear near completion during strong/trending moves.

CME – Daily Chart

The daily chart shows the finer detail of this weekly break-out.  Look at the numbered daily candles 1-7 that made that weekly resistance level break.  Candle #1 made a clean break and close above an obvious resistance level of the weekly chart/daily consolidation pattern.  Candle #2 was the short-term traders testing the conviction of that break-out … they actually opened the stock slightly lower and pushed all of the way below candle #1’s prior low.  Most retail traders playing the break-out would have placed their stops below that break’s daily candle – the machines and algo’s always are testing price patterns for weakness!!

Instead of really putting the boots to the weak longs break-out traders, the sellers actually lost control on candle #3 when price pushed back up and actually closed higher above the prior break level. Candle #4 saw an even bigger gap to test the strength/willingness to fight in the sellers.

Candles #5-#7 was just a good old fashioned short-squeeze … I think that taking into consideration the weekly/monthly charts and the declining volume on the daily chart during this squeeze higher, I think CME is bound to find a pivot high soon that will then see price trade back below the breakout level of that weekly chart ($127.96).

Bottom Line – the longer term charts for CME are pointing to a trend that is long-in-the-tooth and bound to find resistance near the current levels.  The daily chart’s push higher looks more like a squeeze of the shorts that were testing the resolve of break-out traders.

Cheers … Leaf_West

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