Overview

Not very much has changed since last Friday.  The market sentiment is still cautiously bullish even though more and more people expect the market to correct soon.  In today’s SP 500 Futures Renko char, it is apparent SP 500 Futures closed at a all time high.  It cleared the previous resistance at 4176. In addition, a W pattern or double bottom has been established.  This means we should expect more new highs in the coming days.  What’s ironic is the market simply moves higher every day while people point their fingers at the charts and say how ridiculous this is.

What’s Next

On the daily and the hourly charts, the W formation is prominent.  I think the index can go higher.  The RSI on the daily chart is 70, and 68 on the hourly chart.  There’s certainly room for the index to go higher as well before it’s overbought if there’s such a thing called overbought nowadays.

W is formed.  The resistance 4176 now becomes support.

Here’s the daily chart.

Here’s the hourly chart.

How to Use a Renko Chart in Trading

Minor price movements are removed from a Renko chart because each Renko brick size is predefined. If a brick size is defined as 6 points, a brick is not painted on the chart unless the price moves up or down and closes at least 6 points away from the current price in a given timeframe. Because the small fluctuations are filtered out, a trend, support or resistance is easier to be identified.

Since SP 500 Futures is in the new territory, I think a short trade could wait. The next resistance level would be around 4200 because it is a big number and a psychological barrier more than anything else. On the downside, the first line of support is 4176 / 4164, followed by 4128 and 4110. Since the uptrend has lasted for a long time without very much correction, I think chasing the price to initiate a buy position is relatively risky. Maybe buyers can wait for a correction and look for a buying opportunity.