Sellers did serious technical damage in the E-mini on Tuesday, reports Ricky Wen.
Tuesday’s session saw an immediate downside continuation based off Monday’s double top/lower high setup. Essentially, the bears broke support and hit a quick home run into the 2718 target on the E-mini S&P 500 (ES), based on the 20-day exponential moving average. And then buyers showed up to put a temporary floor in place (see chart). It was a fairly simple trend day to the downside that could be classified as a ‘gap down and go’ day given the fact that the majority of the losses occurred during the overnight Globex hours.
The main takeaway is that the market is battling against a confluence of resistance as price action hovers between 50% and 61.8% of the retracement zone of the entire bear market drop, from 3397.5 to 2175.
In essence, this is the area where the big bad bears will be looking closely for a pre-determined low risk versus high reward playbook setup. Whether they succeed or not remains the billion dollar question, but they will definitely try their hardest for the turn and supposedly climax of this current move based on the setup, statistics and historical data. As of writing, we’re treating the 2885 ES level as a temporary top; the temporary floor was at around 2718 from yesterday’s 20-day EMA backtest.
What’s next?
Tuesday the E-mini closed at 2733.25, around the lows of the session indicating that it was a successful trend day based off of Monday’s bearish setup. Now, here comes the tricky part because we are likely going to have an inside day/shakefest for Wednesday, then declare the real winner on Thursday/Friday for either the turning point to the southbound or the grinding higher in the 20-day EMA, leading the market back into its next resistances.
In short:
- Key idea is to watch 2785/2800 immediate resistances today for potential range high scalp/STFR trend setup. Wait and see.
- Tuesday the bears accomplished the backtest against daily 20EMA 2718 and the bulls stick saved it on first try basis on the daily chart time. This means that the trending support of the past couple weeks remains strong as buyers showed up at precisely where they needed to (2700-2720 is a big zone).
- Our four-hour white line projection still remains king, but we’re at a critical juncture where it could invalidate if bulls break back above 2833.5. If it breaks above 2833.5, then Tuesday’s daily backtest at 2718 becomes the confirmation that it was a higher lows buyable dip.
- Price action is still trading as an inside week for now (last week’s entire range 2885-2711).
- Zooming out, continue to watch daily closing prints 2316.75 vs 2650 battleground given the current situation of the market backtest against the Dec 2018 lows (March 20+23 closed below 2316.75, then from March 24-April 21th closed back above 2316.75, confirming the temporary bottom setup in development.
Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.
