Tuesday’s session saw an immediate downside continuation based off of Monday’s double top/lower high setup. Essentially, the bears broke support and hit a quick homerun into the daily 20EMA 2718 target on the Emini S&P 500 (ES), and then buyers/bulls showed up to put a temporary floor in place. 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 drop (3397.5-2175). 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 daily 20EMA backtest.

What’s next?

Tuesday closed at 2733.25 in the ES, 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 daily 20EMA, 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.
Yesterday the bears accomplished the backtest against daily 20EMA 2718 and the bulls sticksaved 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/bulls showed up at precisely where they needed to (2700-2720 is a big zone).
Our 4-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 20EMA 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.

See chart reviews and projections on the Emini S&P 500.

Ricky Wen is an analyst at ElliottWaveTrader.net, where he hosts the ES Trade Alerts premium subscription service.

© 2020 Copyright Ricky Wen - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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