Awaiting Another Leg Lower

In last weekend's update, we noted:  "We are pretty much in our next resistance zone at 2710 area. Exceeding this will open up the 2740-50 target area - which is also what the triangle breakout targets. Only question in my mind right now is if we get there and THEN pullback lower to test support or we test support first before rallying up to the 2750 level. My best guess right now would be a continued choppy move higher into the 2750 area followed by a move lower to test the 2650-2620 area." 

We got very close to the 2740 area on the S&P 500 before beginning a pullback over the week.

What next?

We tested the first support at 2680 before the hard bounce to end the week. This bounce has taken us right back up the resistance area at 2710-18 area. I want to see another leg lower begin from around here down to the 2650-25 area. But if we make it through the 2710-18 area, odds will begin to shift to us having one more high out there in the 2760-80 area.  Options data supports the idea of one more high on Wednesday. Tough to say right now which path the market is going to take so I am happy being flat and waiting for better prices to come for a re-entry back long. 

ES Grey Zone areas - Resistance first comes up at 2710-18 area, second area up is at 2741-50. On the downside, we have support at 2680-73, then 2658-54. Below this support is present at 2623-18 area. 

All the best to your trading week ahead..

Princely Mathew hosts The Smart Money premium service at ElliottWaveTrader.