In yesterday’s post: Tuesday, 3/15/16 Broke 2007 ES overnight, retesting from underside, I included an update this morning saying that the overnight action was not bearish and if I were to guess, I would say up for this Fed Day.
As you may know from prior posts this past week, I’ve been quite skeptical about the possibility of a big bearish turnaround. As much as I would like for that to happen – the pattern just isn’t setting up for it — at least not yet.
This morning we had an A-wave rally, then a B-wave drop that concluded right before the Fed announcement – but leaving enough time from 1:15pm EST to 2pm EST to set up a tiny 1-2-i-ii. What happened next was the Fed announcement and rally.
But of course it didn’t go up in a straight line. After 3 minutes, of a pop, it pulled back for the next 10 minutes or so, but then resumed the rally towards new highs above ES2020 – ultimately closing around 2017.
The Russell did a pop, but then shortly after — it actually fell below where it was at the Fed announcement. But then it eventually rallied back up, though somewhat sluggishly.
This pattern got invalidated overnight because ES went all the way up to 2011 before coming back down to 2000. The fact that it went higher than the 2007-2008 region I had marked on the 5min chart was not good for the bears.