Market Feeling Out A Bottom Or Another Lower Low In-Store?
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We saw the market open higher today with the price action being very sloppy and overlapping in nature suggestive that this move up off of the lows was indeed a corrective retrace higher after we saw the market make a sharp decline over the past several weeks. After lunch, we saw the market make another relatively sharp decline but we are still sitting over micro support which is still keeping the potential for the bottom that was struck on Monday to hold and see this make a larger corrective move to the upside before any further lower lows are struck. With that being said should we begin to break back under micro support then it would open the door for this to make yet another lower low before a more sustained bottom is struck. We likely will have the answer as to whether or not this can indeed hold support in the next few trading sessions.
I do not have anything to add to the bigger picture update from what Avi has laid so that chart remains the same.
Zooming into the smaller degree timeframe charts the analysis is fairly straightforward and as long as we can hold over the 5240-5145 zone on the ES then we still can be bottoming in the green wave b as part of the larger corrective move. Under that case, I would be looking for a micro five-wave move to the upside off of one of those support levels to begin the wave c up. From there we would need a break back over the 5363 level to confirm a bottom.
If we are unable to hold over support and break under the 5145 level then it would open the door for this to still see yet another lower low before any significant bottom is seen. Under that case, I would likely count the high that was struck today as a wave iv and any new low as a wave v of a larger wave a down. I would be looking for the 5016-4904 zone to hold as support under that case. Should we begin to see that zone break then it would open the door for this to see a larger and more sustained breakdown lower. That would certainly be an outlier at this point in time but not out of the question should we begin to see a sustained break through those levels.
So while the market does appear to be feeling out a bottom we still need to be cognizant that with this high volatility environment, we need to certainly be cautious as the market can certainly surprise us to the downside.
