S&P and Russell potentially have an inverse head and shoulders while Nasdaq potentially has an extension set up.
While the drop over MLK weekend was more prolonged than expected , we did hit support and reverse into the close.
This consolidation is reaching its limit – so if the market is to move up, it needs to do so tomorrow.
We have the Trump auguration event end of the week as a potential catalyst.
It looks like the wave ii played out – but dropped lower than I expected. We had a zig zag a up and a zig zag b down for a b-wave low that just pierced the overnight low and then reversed.
The wave ii pulled back towards 2257ES – a bit more than I expected but within context of the pattern.
While it’s possible last Friday’s high would complete 5 waves – judging by the high level consolidation – I’m more inclined to label this as a wave ii consolidation rather than the beginning of a series of waves to the downside — unless we struggle to get over 5050 tomorrow.
The drop was definitey more pronounced than I expected. But it did dip into that 1350 support level – potentially forming an inverse head and shoulders pattern. There would have to be follow through tomorrow if so.
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