ES rallied higher into open, then started to drop and soon broke the overnight low. It finally found a bottom around 4341, made a clear abc bounce, reclaimed over 61.8% then dropped almost the whole afternoon, made a double bottom 15 minutes before the close. The whole day action fits the typical pattern of reversal day, and the rally since Sunday night is choppy and overlapping, all of these force me to shift the odds to bears temporarily. Assuming this thesis is right, how low can we go?
Well the rally from past few days form a very nice parallel, so I have to take the abcde pattern into consideration. If this is the case, then we are likely to find support between 4290~4300, and bottom is more than likely to hit before tomorrow NFP or shortly after that. According to EW theory, such structure should not happen in wave 2, so I have to put it as wave (B). Given the news of Ukraine crisis still pretty much affect the market, this scenario fits pretty well. But once the 4290 is broken, next micro support would be around 4250~4260, and a standard wave (2) typically find support at 50~61.8% retracement, plus the whole hundred number effect, I would give a general support zone of 4200~4260, it would be hard to predict exactly where it finds the bottom, but I would be eager to find bottoming structure if market reach there and buy calls for further rally. And if bears is really strong, for example if whole Friday is trending down, then it's possible that we will finish a cypher pattern which target all the way to 4175, this case may also happen if Friday is weak and more bad news from Ukraine came during the weekend.
Please be noted my bearish bias is due to pattern, and it's purely short term. In the intermediate term, no matter what, I would expect the market find a bottom in next two trading days, and start our rally toward 4700, which could be in late March. Also bears in short term control only if afternoon high of 4395.5 holds or in the worst case, morning high of 4418.5 holds, whenever that happens, bear lost already, and we will go probably 4580 range next. Also bears need to start the drop no later than tomorrow's noon, any further delay would fail the pattern and we will probably need to find something else to match.
Well the rally from past few days form a very nice parallel, so I have to take the abcde pattern into consideration. If this is the case, then we are likely to find support between 4290~4300, and bottom is more than likely to hit before tomorrow NFP or shortly after that. According to EW theory, such structure should not happen in wave 2, so I have to put it as wave (B). Given the news of Ukraine crisis still pretty much affect the market, this scenario fits pretty well. But once the 4290 is broken, next micro support would be around 4250~4260, and a standard wave (2) typically find support at 50~61.8% retracement, plus the whole hundred number effect, I would give a general support zone of 4200~4260, it would be hard to predict exactly where it finds the bottom, but I would be eager to find bottoming structure if market reach there and buy calls for further rally. And if bears is really strong, for example if whole Friday is trending down, then it's possible that we will finish a cypher pattern which target all the way to 4175, this case may also happen if Friday is weak and more bad news from Ukraine came during the weekend.
Please be noted my bearish bias is due to pattern, and it's purely short term. In the intermediate term, no matter what, I would expect the market find a bottom in next two trading days, and start our rally toward 4700, which could be in late March. Also bears in short term control only if afternoon high of 4395.5 holds or in the worst case, morning high of 4418.5 holds, whenever that happens, bear lost already, and we will go probably 4580 range next. Also bears need to start the drop no later than tomorrow's noon, any further delay would fail the pattern and we will probably need to find something else to match.