A gap-down open last Friday gave short-sellers opportunity to exit their short and reversed long ahead of the long weekend with the usual profit-taking drop at the end of the day.
The direction of Monday morning trend will depend on where it opens and trades in relation to key inflection price levels, 3510 for NQ and 1782 for ES.
Bullish above 3510 for NQ and above 1782 for ES, with key resistance at 3535 for NQ and 1788 for ES.
-- A clear and sustained break above key resistance should trigger short-covering rally. A falsebreak should trigger a fast trend reversal, targeting a break below Friday low.
Bearish below key inflection price levels, an indication that the downtrend may be resuming, first downside target is a break below Friday swing low.
-- Supports are 3495 and 3455 for NQ, and 1765-1768 for ES
Carry trades is the main key determinants of trend direction for the US stock market.
