ES daily 02/24: bottom reached? should see pullback first
Last night came the news that everyone is waiting for: official Russian invasion of Ukraine, market tank immediately and stay around low almost the whole night, and we reached the lower edge of ideal support range of 4100~4150. From the low of 4101.75, market then rallied all the day since regular market open for a wholly 188.25 points, hit 4290 a few minutes before close. The reason for today's rally is very simple, market hates uncertainty, Russian invasion removed the biggest uncertainty. The announcement of sanctions against Russia removed the next biggest uncertainty. I have been telling to watch for the 150~200 pts rally within a few hours for the sign of bottom, and today we got that sign exactly as I described, so what would be likely path next?
First of all, although we completed the initial but crucial step today and we now have a great potential to form a bottom that could last months and should bring us back to 4700+ and potentially 5500+, this is only the first step. From past fractals, I have seen that this gain totally erased within the next trading day and go directly lower. Just as everyone knows, for a trend reversal, we need to see higher high/higher low instead of lower high/lower low, so what we need next is a higher low. My primary route now would that we have completed wave (C) with alternative count that last night low is only (3) of (C) and today's rally is (4) of (C), and we will see a new lower low as (5) of (C) in a few days.
Please be noted even if the bottom is reached already, almost all fractals would see a pullback of 50%+ tonight/tomorrow, and some could even hit 76.4%~88.7% retracement. So I would expect we would see below 4200 before EOD tomorrow. That's why the direction of this idea is short, which is only reflects my direction bias for tomorrow or Monday. From there, ideally we would go up again and break 4345.5 (Feb 23 premarket high) ~ 4358.5 (Feb 22 RTH high), thus printing higher high and higher low next few days. And most importantly, 4101.75 low must hold at all time, or all of this procedure would start over again.
First of all, although we completed the initial but crucial step today and we now have a great potential to form a bottom that could last months and should bring us back to 4700+ and potentially 5500+, this is only the first step. From past fractals, I have seen that this gain totally erased within the next trading day and go directly lower. Just as everyone knows, for a trend reversal, we need to see higher high/higher low instead of lower high/lower low, so what we need next is a higher low. My primary route now would that we have completed wave (C) with alternative count that last night low is only (3) of (C) and today's rally is (4) of (C), and we will see a new lower low as (5) of (C) in a few days.
Please be noted even if the bottom is reached already, almost all fractals would see a pullback of 50%+ tonight/tomorrow, and some could even hit 76.4%~88.7% retracement. So I would expect we would see below 4200 before EOD tomorrow. That's why the direction of this idea is short, which is only reflects my direction bias for tomorrow or Monday. From there, ideally we would go up again and break 4345.5 (Feb 23 premarket high) ~ 4358.5 (Feb 22 RTH high), thus printing higher high and higher low next few days. And most importantly, 4101.75 low must hold at all time, or all of this procedure would start over again.