As the e-mini S&P 500 circled unchanged near the end of Friday's session, we noticed the price action had failed to lift off of the lower Bollinger Band line at 1206.25 on the daily chart.

In an underlying, very constructive technical set-up, a traverse from the upper BBnd line (1289.25 on Oct 27) to the lower BBnd (1207 on Nov 17) usually resolves itself in a potent upmove off the lower line, which renews the dominant uptrend.

It is very curious that the e-SPZ was unable to sustain strength on Friday that propelled it away from the BBnd line at 1206.50. This makes it vulnerable to the opposite outcome: a resumption of weakness that presses the e-SPZ beneath the lower BBnd line (1206.25).

Under such circumstances, the minimum downside overshoot of the lower line is 1%, which projects weakness into the 1995/94 area next.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.