For you early birds, ES just reached our price target range from Monday — though admittedly late.

A more drawn-out affair could target the falling white midline late tomorrow afternoon at 1754.50.

Even yesterday, it was looking much more immediate.

I’m looking for 1754-1755 around 12-1am EST tonight.  It’s the midline of the biggest falling white corrective channel, and the bottom of the rising red channel — not to mention the target of the H&S Pattern currently setting up.

This remains my top choice for a reversal.  The fact that it’s sneaking in after hours is a good sign.

A close-up:

UPDATE:  8:31 AM

There’s the 1754.50 tag — an excellent spot from which to try a long position.  As always, use stops.  The cash market could easily wake up bearish.  The next lower support is around 1750.

More after the open.

UPDATE:  10:25 AM

ES and SPX are almost back to even on the day — this, following a backtest at the white .786 to below the .500 Fib level.  In other words, while we could get some more substantial pauses along the way (the .886 at 1763.55?) it’s no longer necessary.

Even more encouraging, the dollar’s small white channel has broken down and is backtesting.

Recall that this channel contained the backtest to the rising red channel that broke down on Sep 18 after a steady 2 1/2 year rise since the May 2011 top.

The dollar is now free to continue weakening.  The EURUSD, as expected, broke out of and is backtesting its falling white channel.

But, the big development we’ve been watching is the USDJPY which, as expected, has broken out of and backtested the pennant pattern it’s been in since last January.

The implications are huge.

continued for members…Remember, pennants are continuation patterns.  That is, they represent a pause in the primary direction of a security — often to a significant Fib extension.

In this case, the .618 extension of the rise from 77.12 to 103.72 (Sep 2012 to May 2013) lands at 110.12 — which just so happens to be the 1.618 extension (purple, 109.87) of the drop from 103.72 to 93.83 between May and June 2013.

This is beyond the .500 retrace (105.6) of the drop from 124-75 that began in June 2007, and nearly to the .618 (112.68.)  The .500 should provide a pullback opportunity, and the .618 could occur well into 2014.  But, we’ll cross those bridges if/when we clear 103.72.

My assumption is that this rally occurs as a backtest to the broken rising white channel, and within the rising yellow channel.  They intersect (along with the rising purple channel .786 line) very close to the purple 1.618 around the middle of December, so I’ll place the purple Point D there for the time being.

This jibes with my expectation that TPTB are working to keep the crap game afloat through the end of the year.  US stocks are highly correlated with the USDJPY, so these forecasts play quite nicely together.

Things might peak before Dec 31 but, if so, shouldn’t suffer much damage.  The point, of course, is to demonstrate how spectacular the market is and thereby draw in more suckers.  But, that’s another post.

I’ll spend the next few hours looking at the correlations with ES and trying to infer the most likely path to ES 1837.  Immediate obstacles to overcome: 1770.17, 1774.50 on the way to 1780 — the 1.618 of the 1770 to 1754 drop and the larger 1726 to 1640 drop (from Sep 19.)

UPDATE:  3:55 PM

Almost there.  Looking for a reversal at 1780.