c505218304b50c59c3659f6dda43bae7-links-0–>The market had 2 critical levels — 2153 and 2157 — the market was able to go through them towards 2164 before retracing this morning towards 2154. Since then, it formed an A-B mountain consolidation pattern and is awaiting the next move.
A possible catalyst will be tomorrow’s 8:30am report – both for the overall market and for metals.
Yesterday, I was expecting the market to find some kind of resistance in the 2155-2160 region, but even overnight, the market failed to go below that area. That level of consolidation indicates we may not get that drop to lower lows.
On the other hand, the drop into 2140 Tuesday morning seemed like it’s not done yet as we didn’t get a 4-5 down.
This reminds me a similar situation that happened in the middle of May when we broke critical support — but then reversed. Below shows the historical charts of what happened then — the question is whether history will repeat or whether this time is different.
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We had a quick 4th wave — that took less than 2 days. This was a 35 point ES drop in short period of time.
The top at 2177 was a little bit short of what I was expecting for a 5th wave. So it may make sense to count that as a B wave high and the drop as a C-wave to complete the corrective 4th wave. Either that — or the 4th wave is not complete yet and we could revisit 2140/2130 before reversing.
The green line is the critical 2153 level – we broke below it, but did reverse back above it. So far we are holding above it.
Seeing a potential repeat of history. Back in the middle of May — we were dealing with critical 2030/2040 ES support. The market broke through it the day after the Fed announcement – then quickly reversed. We never a got a full 5 waves down — but it didn’t matter because the market reversed.
I think we may be experiencing something similar in which we touched 4th wave support at 2140 this time — but did not spend much time in the region. Yesterday, we did not spend anytime below 2150 once we broke above it. Overnight, we also did not see signs that this would turn down in a 5th wave or even act as a B-wave top.
It looks like that 5h wave down won’t happen.
I was initially expecting 20.36 level to hold as an ideal retracement point, but looks like the market had a mind of its own and went further. That said, the market did reverse and we are pretty much back to where we were yesterday during the day.
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