On Fed announcement Wednesday the S&P 500 index made fresh bounce highs before the markets turned down on the daily chart despite surprising good Amazon, Apple, Google, Facebook and Microsoft earnings figures.
Of course the uptrend on daily and weekly base technically remains in place but unless the just fired pullback signals are not fast and above all, fully reversed, we have to expect the pullback to last about 10 trading days, respective 3 full week candles.
The stock markets have rallied without much of a break since March coronavirus panic sell-off lows and now that we are in May - "Sell in May, and go away!", what is the starting point of the weaker 6 months period of the trading year, some try`s shorting the US stock indexes and selected US stocks now maybe will be rewarded above average.
For this first try lets today observe and forecast the S&P 500 e-mini futures contract (ES #).
There are now 6 weeks where every low is above the low of the prior week. That is extreme, especially after a huge sell-off. It is therefore a buy climax. Market still trades very close to it`s actual main resistance where a nearly perfect intermediate top formed over the past four days.
The now hit main resistance area is formed on the one hand directly from the alltime-high, but on the other hand also directly from the annual low, so above average negative forces combine at the bounce highs and this usually results in an immediate bearish resolution.
This is an important price factor observation and with a little bit of luck the almost perfect entry into a short position could succeed.
First, let's have a look why at the bounce highs resistances have kicked in that have their origins in the alltime-high (ATH). For this we measure a weekly 2 Fib number candle GUNNER24 Down:
This initial down impulse range of the first 2 sell-off weeks pointed to natural support starting at lower line of 2nd double arc. Of course many more future supports arise from this first impulse, but we don' t have to note them because they are not, or not yet relevant. Except for one, what is the 2640 pts, which I will analyze in detail in a moment.
So, the # 1 // 2174 pts year low was reached at the first test or after processing the lower line of 2nd, which support triggered the bounce, what is a mighty bounce in terms of price and time. Mighty because in a very short time both first square line and Blue Arc were tested back. For the first time at the top of the 4th week of bounce.
Then also at the highs of the 5th bounce week. Here you can see very accurately that the open of the 5th bounce week is exactly at the Blue Arc (resistance) from below. Both, first square line as Blue Arc form combined MAJOR resistance magnet as no single week of the bounce was/is able to close above that GUNNER24 Resistance Nest.
The price at bounce highs has reached a yearly resistance magnet cause first square line as Blue Arc directly spring from the ATH, what is at least a confirmed important price point on yearly base. So far bounce-high found to the T resistance at within setup naturally anchorable Gann Angle = ATH Resistance Angle.
==> Yearly resistance kicked in at bounce highs and this usually should lead to the very classic backtest of within bounce upward broken upper line of 1st double arc what is now nearest and strongest arc support below the current 2817 pts!
This upper line of 1st is a very interesting rail the price should test sometimes in the future and likely in the very near-term future. This upper line runs at 2640 pts for some week candles and therefore units 100% perfectly with the „ideal" backtest magnet of the 38.2% Fibonacci support level of the 2020 ATH to 2020 Low cycle what is at 2641.38$.
2640 shortterm downtarget could be tested back at lows of bounce week Fib number 8 what forms next due interesting time turn window!
Above I try to nail the „ideal" sell-short entry for the next 5 trading days what is the very-confirmed = future strong Blue Arc yearly resistance rail. See, that Blue Arc is at 2866 pts for the next trading week and this is combined weekly GUNNER24 Resistance Magnet.
Because if we measure the bounce = weekly upward trend as follows, we can see that for the next trading week a confirmed = normally future strong GUNNER24 Resistance Arc is also precisely at 2866 pts.
At 2866 pts runs the natural and now fully-confirmed and negative tested upper line of 1st double arc resistance out of the # 1 // 2174 pts // 2020 Low. Watch additionally that lower line of 1st became confirmed and strong bounce resistance by this # 6-week opening auction what was braked by the lower line of 1st double arc rail.
This 1st double arc environment together with first square line & Blue Arc within weekly 2 Candle GUNNER24 Down Setup form unusual attractive = uber-strong bounce resistance magnet what perhaps or to be more precise normally should lead to a 10 days pullback what could/should test back 2640 pts sometimes in course of bounce week # 8!
This above shown initial up impulse measures to the highs of bounce weeks No. 1 and # 2, what are both Fib numbers which were almost at same price. That is why this is a weekly 1/2 Candle GUNNER24 Upward measurement.
These early bounce extremes together lead to the fact that the 2640 price likely forms most strongest future support and ideal backtest magnet as there runs the first square line together with the Blue Arc.
And together with the upper line of 1st double arc attraction within 2 Candle down setup there is well-recognizable triple GUNNER24 Support Magnet on weekly base what together with the 38.2% Fib retracement support usually marks very important support cluster for ES #.
A support cluster that usually is relevant important on yearly base because it is a combination of a support directly out of the annual low and directly from the ATH.
==> 2640 pts is a MAJOR SUPPORT for ES #. This could be now very important support on yearly base and this is why any pullback could test back this MAJOR – perhaps and ideally at week # 8-bounce lows - followed by a 2020 bounce continuation which perhaps is even able to test and work off the 3100 pts surroundings, there where the potential GUNNER24 Uptarget of the 2nd double arc runs automatically for the/a bounce week # 13-Fib number.