ES daily 02/16: bullish resolution that needs follow through
I was right that today is indeed a buy the news event day. But I was too naive to think Ukraine issue already settled, just look at how many new spikes we had in the last 24 hours. Actually, we even just had one less than one hour ago. So with Fed minutes day resolved in a bullish way, what would be the likely path next?
Well, we can review the rally from Monday till last night as five wave up, which could be wave 1 of the (C). If we can hold 4440~4450 tonight, we probably already have wave 2 done with today's morning pullback, and this bode well for a direct push higher. If that range is lost, then today's drop and afternoon rally is merely wave a and b of wave 2, and we would have another pullback tomorrow to retest today's range before going higher. Consider in the past 9 months, about half of the day after Fed/Fed minutes are doing significant reversal of whatever direction of the day before, I would not be surprised to see this happening tomorrow. But either way, I would like to see a bullish follow through no later than this Friday that makes a sustained break above 4520 range, which could confirm the start of this (C). Before that, be prepared to get more news bombardment that can suddenly rally/drop market for 10+ points.
As a remainder, since we are likely in a big B wave, market direction is much more difficult to tell. If we somehow break Monday's low, that would be extremely bearish, we could go much lower, and go directly test January low or even lower. So I always keep some hedges, just in case my theory is wrong.
Well, we can review the rally from Monday till last night as five wave up, which could be wave 1 of the (C). If we can hold 4440~4450 tonight, we probably already have wave 2 done with today's morning pullback, and this bode well for a direct push higher. If that range is lost, then today's drop and afternoon rally is merely wave a and b of wave 2, and we would have another pullback tomorrow to retest today's range before going higher. Consider in the past 9 months, about half of the day after Fed/Fed minutes are doing significant reversal of whatever direction of the day before, I would not be surprised to see this happening tomorrow. But either way, I would like to see a bullish follow through no later than this Friday that makes a sustained break above 4520 range, which could confirm the start of this (C). Before that, be prepared to get more news bombardment that can suddenly rally/drop market for 10+ points.
As a remainder, since we are likely in a big B wave, market direction is much more difficult to tell. If we somehow break Monday's low, that would be extremely bearish, we could go much lower, and go directly test January low or even lower. So I always keep some hedges, just in case my theory is wrong.