Welcome to Whipsaw City. Population: dwindling. This is the kind of market designed to shake out those who are easily spooked.
The eminis made two new lows — with no follow through. But, it fleshed out the rising red channel, so the 1783.50 low looks reasonably solid and needn’t stop out our 1784.75 long position.
The key will be getting back above 1791.25. Though we’re likely to see resistance at 1792.92.
UPDATE: 10:30 AM
Got the reversal at 1792.75 at the falling white channel top intersection with the rising white channel line. It’s the channel rising from left to right at a 40% angle in the spaghetti chart below. Note that the white .618 is one potential .618; the other is the grey one at 1793.54 (from 1799.75 vs 1798.25.)
I can’t help but wonder if the white .786 at 1782.07 might be in the cards. It would satisfy the red channel (a little overshoot) better, and would also put in a better bottom due to it being a completed Gartley. But, for the moment, this move feels rather impulsive.
If the moon shot is to continue, we’d want to see the purple midline at 1789 hold. I’m going to apply the official moonshot channel to this move and see what happens.
UPDATE: 11:15 AM
1788.75 would be a good reversal spot if the moonshot channel is in effect — probably worth a try. If it holds, next stop should be the grey .786 at 1796.27 (also the purple 1.618) or .886 at 1798.
The 5-min RSI is signalling a potential reversal.
UPDATE: 11:45 AM
Spoke too soon. The 5 min RSI channel broke down, and it’s looking more like another white channel tag at the purple .786 (1785.69) is up next.
The RSI. Now we have to worry about a backtest and continued drop…
UPDATE: 12:39 PM
Finally settling into a triangle pattern. If the pattern holds, the next stop should be 1787-1788. Remember, they break out and down.
Here’s a closeup. If it breaks down (my top case) it’s likely going for 1782 or 1780 (preferred.) Note that 1780.36 is the 1.618 of 1726-1640 and 1780.14 is the 1.618 of 1770-1754. So, 1780 would make for good backtests on both.
UPDATE: 1:08 PM
Looks like a breakdown, so 1780-1782 it is. These represent the .786 and .886 retracements of the 1777 – 1799 rally.
The ES chart is getting a bit difficult to read. Here’s a clearer picture: 1779.82 represents the white .886…
… and, a backtest of the red 1.618 (1780.36.)
UPDATE: 2:15 PM
Tagged the .786 at 1782. Should get a bounce here, followed by a potential drop to the .886 at around 4PM ET.
