As discussed yesterday, ES (the electronic mini S&P futures contract) has been trading in a congestion pattern.We use .786 retracement levels to determine the parameters of this congestion.A bounce at opposing .786 levels indicates congestion maintaining, where a break tells us that a trend is likely in the making or continuing.

Current 45 minute chart:

If we open above 853, the next target level is 866.This would also break the longer term .786 resistance at 861; the key level we've been watching which also shows up on the daily.A break of that level calls the initial daily target at 885 into play and would also put us back on track to the larger target, visible on the daily chart below, at 928.

Of course we can expect pauses and pullbacks at intervening levels, particularly the green extensions.But we'll monitor support in price and time on any pullback to determine when the rally should resume for additional buy side opportunities.

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