Here is a five minute bar chart showing globex trading in the e-minis from yesterday afternoon through the early part of today's pit trading.
In this morning's guesstimate I said that the drop below the previous low at 1082.50 implied that the market would continue down to 1040 or so during the next week. The top of my day session range estimate for today was 1086. I was expecting that a the trading range that formed after this morning's low (third blue oval from the left) would contain any rally from the open.
Instead the market burst through the top of that trading range at 1085 and thus far has rallied as far as 1092.50. The day session high thus far is above the 1089.50 midpoint of the drop from 1112.25 to this morning' s low at 1067. This combined with the visibly higher trading range that I think is forming (last blue oval) is pretty good evidence that the drop below 1082.50 was a shakeout, not the start of a bigger downtrend. If I am reading the market correctly any reaction we see today should halt at or above midpoint support which stands just about at the level of the 1082.50 low (purple dotted line).
The market's action subsequent to the Dubai Global shakeout that we saw during the past 36 hours shows that the shakeout was seen as a buying opportunity by longer time frame traders and investors. The implication is that the up trend from the November 2 low at 1026 is still intact and that the market is preparing for a move up to 1140-50.