Studying price channels using regression analysis since the March 2009 low reveals the S&P E-Mini Continuous Futures Contract (@ES) retesting its upper boundary last week. The first arc in the weekly chart below shows the index moving from one end of the channel to the other from March 2009 to May 2011. Projecting the same arc to the last retest of the lower boundary may provide some guidance as to when the next major pullback may occur.
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Written by Frederic Palmliden, CMT, Senior Quantitative Analyst, TradeStation.