ES - Wednesday had a very tight trading range, sandwiched between the swing-high close of 11/13 (907.75) and the diagonal trendline (see two green lines). It appears this level is holding very well, as this swing-high has prevented the last few days from closing any higher. As menitioned in Tuesday's Homework this area is also the 61.8% retracement level (906) from the previous move down. Once again 897 was an important level for Wednesday.
From the bear's perspective, we made a 180 degree move from the 11/21 low as mentioned in this post on Gann. 12/8 came within a couple points of this 921 level and fell back. A movement to the 180 degree level is an important one and a 45 degree (872) or a 90 degree (825.75) retracement should be expected (see chart). These two levels are, coincidently, levels that have held high importance in the past. Amazing how they are back! This 180 degree level is an important one, since it is the midway point of a full 360 degree rotation. (FYI, the 360 mark is at 1122, which just happens to be at the area we broke back at the beginning of October to fall to this whole new trading range we've seen for the past couple months.)
It also seems we are in a rising wedge, which is a reversal formation. These are the blue lines on the chart. A reversal pattern right at a reveral area. Hmm...
From an intra-day perspective, we are currently at an interesting support area (889 area). If we are going up, this seems like the place to buy. You can see in the chart the two support lines coming together, right where we are at. If this proves to be a bullish spot, a conservative target is 893.75, then 897. (If we fall straight from here, look for 887 and 872 target areas.)
However, the patterns don't suggest a move up. The maximum move up the patterns would allow is a retest of 919, then a failure. This 919 level lines right up with the red resistance line, the high of 12/8, and the high of 11/14. In other words, look to short 919 area (if we get there). (Be careful of that important 897 level on the way up, that could stop us cold)
The last few days have essentually moved sideways and we don't have clear direction, so we will let the market tell us where it wants to go and we'll act. We just need to be prepared with different scenarios.
Summary 11:00 CST - After my post about the 889 area, we fell to 885 before jetting up to my 897 area. If you stop was large enough, it would've worked out very well. After hitting that area, we rotated exactly 135° down to 884.5 (also yesterday's low). We are currently exactly at the 180° rotation up (903.50) from that low. A fall from here would make 899 (45°) to 895 (90°).
Or, do we wait for that 919 area? A full 360° rotation up from today's low is 922.50. Based on that, I say today's high would max out at 919-922.50, if we get there.
Summary 12:34 CST - In hindsight, yesterday's low gave a 180° rotation up to 903.50. So far, 903-904 area proved to be big resistance for today.
Summary 15:00 CST - A 360° rotation down from 903.50 (the high area of today) is 866. Today's low, 867.50! (Same low as 12/8) That's 1.5 point away from a complete rotation down. In hindsight, the day's action gave us a 180° move up, then a full 360° move down... almost to the point. I need to keep that action in mind when the market sets up similarly in the future. Perhaps in the overnight data we shall complete the move to 866.
I am working to perfect my "Square of Nine" script that will be available on the main site (
http://neoTOOLBOX.com). So far, from what I've seen, it's an amazingly powerful tool. I need to work out a few bugs and add predictions of TIME as well as price. WD Gann truly was on to something!
Homework