Whether you view this market from a bullish bias, or a bearish bias, you must take note of one thing: 1870ES must hold as support for a truly bullish run over 1900ES. Any break down below there will have me very seriously in the yellow camp looking for the lower target region in the low 1800’s next. While we may still have the potential for an ending diagonal in the purple count, we will have to see if the market drops in an impulsive or corrective manner below 1870ES, if it even does.
For now, there are many long term and short term Fibonacci confluence resistance regions where we now find ourselves in the market. The 1886/87ES region is a strong region of long term resistance, as it coincides with a w=y pattern, as well as the c-wave within the y-wave being equal to 1.618 of the a-wave. Furthermore, the cash index has the 1895 level, (which is the comparable cash region to the 1886/87ES region) as the 1.382 extension in this current larger degree wave (3). Just beyond that is the 1905 region in the cash index which is the 1.618 extension off the March 2009 low. So within a 10 point region between the 1895-1905 cash region we have significant resistance that will have to be overcome.
And, again, at this time, all pullbacks much maintain over 1870ES for this market to truly develop the breakout that it seems everyone believes will occur into the low to mid 1900’s next.