Here is a thirty minute bar chart showing day session e-mini trading. This morning the ES kissed the bottom of its trend channel on the new home sales number. At the same time it nearly reached the 1136.75 low of May 25 and dropped below the 1141 low of June 8.
Since then it has rallied steadily. As I write this the market has managed to climb above yesterday's day session midpoint at 1051 and has rallied 17 points versus yesterdays 14 point rally. This action means that buyers are taking control of the market and suggest that this morning's low at 1037 will end the drop from 1127, the August 5 top.
Today's day session midpoint at the moment is 1045.50 and I expect the market to close above that level. If it does the stage will be set for a bullish day tomorrow.
The initial rally off of the 1037 low will probably halt temporarily near 1070 at which point it would equal the size of the biggest rally on the way down to 1037 (blue rectangles). After a 15-20 point reaction from that level I think the market will take off in a move that will carry it well above 1127.
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