A focus on the electronically traded e-Mini S&P and Dow futures contracts.
As discussed yesterday the higher timeframes, weekly and daily, are showing that we're in the right Fibonacci time period for a possible reversal to downside. Since prior price resistance breaks are pointing to more upside in store, it's likely that this will be a period of congestion and consolidation rather than a swift and strong move to short side, but we'll see what the charts tell us!
If we see an acceleration to downside, we'll watch for the emphasized support levels on the daily ES and YM charts to hold or break. Support breaks would favor a an acceleration to downside.
Daily ES showing that we're just moving past the focus of a timing high:
In both cases we know to be on the lookout for at least a pullback from the green target extensions, if not a reversal. Since we've broken resistance which calls larger upside targets into play it's more likely that we'll see a pullback to support and a hold.
We're already seeing a potential pattern shift on the 45 minute charts. Yesterday's time and price support held on these contracts, but they failed to clear key resistance levels. Support breaks this morning on YM favor the idea of a pattern shift to downside on the intraday charts, with an initial target at 7768.
And if ES opens below 822, we're looking for the initial target at 814.50.
Since these moves would result in additional support breaks and the above mentioned pattern shift to downside, we'll be watching the intervening support carefully for signs of a hold on the retest of yesterday's lows instead. As of now, and especially if we see a break of the 822 ES support, the likelihood is that a hold at yesterday's lows would be temporary.