ES #F 081106 Sell HIgh, Buy Low

The daily chart looks like further downside is possible today. The 120min and 60min charts both show topping action at yesterday's high of 1277.00. A short against the 1277.00 would provide limited risk for potential downside trending day today. IF we happen to be stuck in a wave 4 consolidation wave, THEN I will look for a higher high to enter a sell short entry, and the .618 fib level at 1278.25ish is a likely level of resistance.

Update at 09:38 EST: S/T support at .382 fib level and 1271.50. Potential retracement here. Charts remain bearish. Eventual downside targets for today: 1271.50, 1269.75, 1268.00, 1266.75, 1265.75, test of 1262.50 low and possibly lower to 1255.00 area. Gap is at 1275.50 and it is also a .707 fib level. Let's see if there are enough bulls to take the market up to fill the gap. Charts look bearish, so might not be able to fill the gap today.

Update at 10:03 EST: 1269.75 target hit. Potential support here. IF 5 waves down, THEN watch for retracement back up. Trend is still down, as I have no buy signal off the 120min and 60min charts. IF short from 1277.00 level high, THEN this is a good area to "take some off the table" and bank some profits, or trail a tight stop. Holding 1 car with trailing stop.

Update at 10:11 EST: We are currently trending, or impulsing. After an impulse move, there will likely be a congestion or consolidation move.

Update at 11:06 EST: Still stuck in congestive/consolidation range. Potential 5 waves down into support at 1269.25. IF we have 5 waves down, THEN watch for potential 3 wave retracement pattern into .618 fib at 1274.00 as possible. Watching lower timeframes for direction. Current resistance is at 1272.75 and we had a prior LIS at 1272.00. Still no buy signal off the 60 and 120min charts.

Update at 11:58 EST: Short term support with prior support level at 1268.25 (visual). Expect it to be broken.

Update at 12:02 EST: 1268.00 target hit; possible retracement here before continuation. We do have a current 3 wave pattern into the .618 level at 1268.00. Both the 120min and the 60min charts remain bearish for now. The daily chart remains bearish also. Watching lower timeframe charts for signs of retracement.

Update at 12:15 EST: After a move to the .618 fib retracement, one can look for potential move back to the previous .382 fib level, which in this case is 1271.50 ish. Let's see if there are enough bulls to take us up there. Higher timeframe charts remain bearish for now. Price action remains bearish also.

Update 12:40 EST: Long signals getting ready to be triggered off the 15min and 30min charts. Watching carefully.

Update 12:51 EST: Still bearish; looking for lower lows today if this keeps up.

Update at 13:02 EST: Divergence forming with this low at 1267.25 (a .786 fib of day session only chart). Let's see if there are enough bulls left to come out on a friday afternoon or not for a decent bounce. Higher timeframe charts remain bearish unless bulls come out and tip their hand. 1267.25 is also yesterday's open. So far, we have given back all of yesterday's gains. Not a good sign for the bulls. The key is the current low of 1262.50. Based on the daily chart, that will likely be broken. The question is, will it broken today, or next week?

Update at 13:28 EST: Another downside target hit -- 1265.75 is a .786 fib level. No buyers today on a friday afternoon. Can we take out 1262.50 today?

Update 13:57 EST: Market found some support at the .786 fib level for a nice bounce. Buy patterns triggered on 8min, 15min and 30min charts. Potential upside targets now: 1270.00, 1272.75; 1273.75, 1274.50. Potential congestion range wave 4 before lower. The reason I think this might be possible is the position of the daily chart. Watching lower timeframe charts carefully for signs of resistance on this move up.

Update at 14:21 EST: lower timeframes bullish, so market wants to retrace the move down. The high at 1270.25 has now overbalanced indicating a new wave of next degree. Is this wave 4 for lower, or is this part of a bigger abc move higher? Watching the lower timeframe charts carefully. Given that today is friday, and the daily chart remains bearish, another test of the 1262.50 low is likely to be seen today.

Update at 15:24 EST: We are stuck in congestion/consolidation range, and near the lows for the day. Lower lows more likely than not. Unless the bulls like to make an entrance, and arrive late to the party.

Update at 15:33 EST: Slow grind up. Possible short covering into the close. 30min chart had a buy signal for this move up into the close.