With two trading days in the books, heavy selling pressure has finally eliminated the alternate bullish running triangle interpretation for the Emini SP. The key area of critical support (1252.25) has been decisively broken leaving only bearish interpretations.
While today's close was fulfilling , in that the 2007-2011 analogy continues to provide a road map for anticipating where the market is headed, I would be remiss to inform readers that post pattern behavior is really important. The following chart is one of the two bearish interpretations. Where w.e actually ended is not locked in as of yet but it's really not required for the discussion below. What is, is the break of the lower boundary line and w.d.
What I mean by post pattern behavior is that price has just broken out of a triangle and subsequent price action should confirm the pattern i.e. prices should swiftly decline in a thrusting manner with a minimum measured move in length equal to the widest length of the triangle (w.A). That would imply 1219.25 yet further potential exists to 1166.75 if you're viewing the pattern as a classical H&S. Should price action not react as the pattern implies, then something may be wrong with the analysis or the count itself.
Keep in mind that trading is like playing pool. If you've ever watch great pool players, they set up the table for their next shot. That's what we're doing now. First confirming that the analysis is right, then aligning with the trend. In the coming days we'll eventually see a counter trend move that should be a great set up to ride the trend in the largest move down.
Tomorrow we have the jobs report. Given the dreadful economic news of late, a bad report could cause more technical damage to the market. We'll see what happens.
Best of Trading
Post triangular behavior now confirms the analysis i.e a swift thrusting measured move to 1219 (see original call above). As of the 8/4 intraday low of 1212,I remain looking down toward an eventual move to 1166.75.
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