An Ominous Pattern Set Up
With the market coming right to our resistance region in the 1643.50 region – which also represents the .500 retracement of the drop from the 1670ES region, the manner in which it came up to that region has set up a potentially bearish pattern, which, as long as we remain below 1643.50, can take us as deep as the 1560ES region. Yes, you heard me right. This would be a 1-2 set up to the downside in a 5th wave of a larger degree 3rd wave, which I have presented in the trading room as a possibility for the last several days.
If the market is able to move over the 1643.50 region, then the one remaining level of resistance is the 1651ES region, wherein the .618 retracement resides, along with another down trend line. However, if the market were able to slice through that level on the upside, I would be looking at either a truncated bottom being in place in the market for the yellow wave 4, or we are only in yellow wave (2) of the yellow c-wave of yellow wave 4. The manner in which we go up should give us the answer.
For now, 1641.75 is a main level of resistance that will keep the pressure on to the downside. Over it, and we may be targeting 1651ES next.