After expecting the 2560 ES target, the market just blew past it several weeks ago and has stayed buoyant all the way to where we are now sitting above 2700ES.
Coming from the night of Christmas all the way to February has been one of the largest rallies in history.
So the question is where is resistance? Every resistance level seems to not generate any reaction. The next major area of resistance is 2800 ES, but to rally from the lows of 2320 ES all the way to 2800 ES — almost a 500 ES point increase without any signs of a traceback seem unprecedented and impossible. Yet, here we are 400 ES points above the low, now at 2700 ES – so hey, 500 ES point is only just a little bit higher, right?
At this point, need to let the market show its hand before trying to anticipate ahead of time.
Recently, AAPL and FB reported earnings and the market reacted positively. Almost the entire 3rd wave decline has been completely retraced — well beyond that of a normal 4th wave retrace.
We are now at the 78.6% retrace of the 3rd wave drop beginning from 2800 ES down to 2320 ES. I’m expecting 2705-2720 ES region to act as significant resistance. But this market seems to blow through everything, so can’t be so sure.
In terms of support, I see 2600 ES as a potential area that should be retested at least once more if we are to move higher. Probably something in the 2570-2600 ES region – but we need to see a reaction from a resistance level first.
The Nasdaq has surpassed its 78.6% retrace and is slightly stalling. It made this move effectively from the 61.8% retrace level – then the AAPL/FB earnings reports — which then pushed the market to the 78.6% retrace at the 6880 NQ level.
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