Resistance Will Tell The Near Term Story
By
Avi Gilburt
As I highlighted in the weekend update, the 1.00 extension in the ES, with the .500 retracement just above it, represent the resistance in the smaller degree market structure right now. I have highlighted it now on the attached ES chart with a resistance box. And, this will guide us in the coming days.
As long as the resistance holds, I can still reasonably look for another pullback in a [b] wave, assuming that the next pullback is clearly corrective. As an aside, I want you to always keep in mind that should we see a 5-wave decline at any point in time from now, we will have to consider that a top may be in and a larger decline may be setting up sooner rather than later. But, until I see such a structure, I am going to assume the market will take us higher before we see such potential. Therefore, a corrective pullback is what I am now expecting.
This now brings me to a more immediate bullish alternative I outlined today. And, it was based upon the potential 1-2 structure being presented on the IWM chart already. Therefore, I added an alternative in blue on the 5-minute SPX chart. Again, I want to reiterate that as long as we remain below resistance on ES, this is my alternative count.
However, should the market push through the resistance on the ES chart, and we continue through the 5400SPX level, then I have to assume we had a very small 2nd wave already in place in the SPX within the [c] wave rally I still expect, and we are pointing us to the 5540-5580SPX region sooner rather than later.
In summary, until I see a clear 5-wave decline, I am going to continue to look higher in the market. We currently have resistance noted on the ES chart between 5400-5413ES. As long as that resistance holds, then I am seeking more of a [b] wave corrective pullback. However, should the market break through that resistance, and follow through over 5400SPX, then I have to assume that the [c] wave is already in progress, and we had a very small 2nd wave in place, pointing us to the 5540-5580SPX region to complete the [c] wave sooner rather than later.
