Friday, May 07, 2010
Here is a one box reversal, five point box point and figure chart. It shows 24 hour e-mini trading going back to the low in early February at 1041.
The ES has had a 41 point range today - 1091 to 1132. I think we have seen the day's high and low. The market is moving up and down inside the 40 point box (blue rectangle) I have drawn on the chart. I expect more of this sideways action on Monday. But I think the ES will emerge from this box on the upside and begin a move which will take it to new highs for the bull market.
As I noted in a prior post the congestion area formed in April counted down to 1080, although at the time I thought there was no chance the market would drop that low! But it did that and more. The fact that the count from the top area has been fulfilled is one piece of evidence that the low is in place.
I think today's 1091 low will not be broken by much if at all. The 1091 level is the midpoint between the May 2008 high at 1442 and the November 2008 low at 739.
There are two lower midpoints which appear to be responsible for yesterday's 1056 low: the 1054 level which is the midpoint between the May 2008 high at 1442 and the March 2009 low at 666, and the 1064 level which is the midpoint between the September 2008 high at 1291 and the October 2008 low at 837.
I think support beneath the market at these three midpoints is very strong. The implication is that the next big swing will be upward.