Here is a thirty minute bar chart showing day session e-mini trading. This morning I was confident that support just below the 1193 level (dash horizontal red line) would hold. But the market dropped below the 1190 level on higher volume than seen during the past couple of days. At that juncture I decided to play defense and so got out of my longs on a small rally.
The fact that 1190 was broken on good volume following a lower top indicates that a drop to the lower channel line is now likely. My best guess is that the ES will drop to 1175 or so before the move up to 1270 begins.
Some of you are wondering whether we saw a supply shock this morning. I don't think so and here are three of my reasons. First, volume (red arrows and oval) was lower than was seen on the downside last Friday (blue oval and arrows). Second, the market is still stuck in a 1180-1210 trading range - today's volume did not come at a new low for the move down from 1210. Finally, the high volume drop during today's first 30 minutes was more than retraced during the subsequent 30 minutes. This retracement would not have been seen if this mornings drop was truly a supply shock.