Market at Key Inflection Point, but Pressure Remains Down
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After moving higher overnight and into the morning session, the market turned lower, and we are now testing last week's low. That low represents a fairly significant inflection point, and if we see a break of that level, it would suggest that we have begun the next leg down of this move. If we manage to hold that low and turn back higher on five waves, then we may still need to push back over today's high before turning down once again. I will note that even under that scenario, since the move up off last week's low was clearly corrective, the pressure will still remain to the downside as long as we remain under the larger-degree resistance zone overhead.
As shown on the ES chart, last week's low sits at the 7474 level, and a break of that level would give us initial confirmation that we are indeed in wave 3 down as part of the larger wave (c). Under this scenario, we should be targeting the 7319-7216 zone for wave 3 of (c), with the ultimate wave 5 of (c) targets closer to the 7155-7120 zone.
If we hold last week's low, turn back up on five waves, and then break the 7533 level, then we likely need a larger wave 2 to develop to the upside before turning lower once again. Because the move off last week's low was corrective in nature, it is still suggestive of further downside as long as we can hold under the 7589 level. A move over that level would open the door for a more direct push higher, but as long as that level holds, the pressure will remain to the downside in the near term.
