Yesterday was a very significant day for the S&P500 (/ES futures), and the associated indexes. Intraday, it was an interesting experience to see the index flat out, in some sort of anticipation, then react with a surge on the surprise news break of a 50 point rate cut. And only to be digested badly with more fear being stoked and more downside that followed to close near the day’s low. While the candlestick pattern shows a bearish follow through, perhaps what is more important is that the relief rally is done and dusted.
Previously marked out green box is where the relief rally was expected to end. The technical aspect with that point was multi-fold... with a meeting of the trail stop, and a resistance level, it was also a point to break the downtrend (within a large range). In the intraday 4H chart, it was also the meeting point with the 55EMA, which of course, it had failed. The close of yesterday’s candlestick was also a breakdown out of a wedge. Remember that previously, the S&P500 broke up and out of a rising wedge, only to re-enter the wedge, and follow through to exit the other side. This story was completed within 7 days last week. And with the second breakdown of the wedge, more downside can and should be expected.
All these point to a lower low, by middle of next week, as marked out by the 🔴 red circle 🔴. And perhaps even further down towards 2500.
BEWARE!
Previously marked out green box is where the relief rally was expected to end. The technical aspect with that point was multi-fold... with a meeting of the trail stop, and a resistance level, it was also a point to break the downtrend (within a large range). In the intraday 4H chart, it was also the meeting point with the 55EMA, which of course, it had failed. The close of yesterday’s candlestick was also a breakdown out of a wedge. Remember that previously, the S&P500 broke up and out of a rising wedge, only to re-enter the wedge, and follow through to exit the other side. This story was completed within 7 days last week. And with the second breakdown of the wedge, more downside can and should be expected.
All these point to a lower low, by middle of next week, as marked out by the 🔴 red circle 🔴. And perhaps even further down towards 2500.
BEWARE!
Comment:
It is only after the first day of the week, and immediate downside target was exceeded. As forewarned, a lower low was achieved, with a low of 2700. It appears not be be over yet, as there is a lot of momentum and fear in the market...
