Stock, Option and Futures Trading
In a post yesterday we were looking at the ES and the .618 timing in the current pattern. We said if we closed a DOJI then took out the low there could be a hard move to the downside. So far today we have came down but it is not the fact we are coming down it is what the move down looks like. Since this is just part of a bigger pattern and we are in a wedge the opportunity could be limited to the downside and the market can get emotional as the wedge goes out further in time meaning; most of the time we will build smaller wedges inside the bigger wedge and as the waves get smaller the opportunity for a big move becomes less.
This could be a turning point for a bigger move down or it could just be resistance for 3,5, or 8 days. Since we are getting to the end of the wedge the move down could be the smaller 3 day pullback.
All the highs and lows of the wedge have been 8, 13 and 21 days high to low and low to high with yesterday being 21 bars of the 11/25 low. 8+13 = 21
There should be resistance on the markets down to the ES 1225 level which would be just a minor pullback. This means if the market goes up today but stalls at the 1256 level the ES could go from 1256 to 1225 quickly. This is why we wanted to protect the calls going into today.
For now the best plan is to watch the next few days and see how the waves look before getting too aggressive inside the wedge.