ES Weekly: As shown in previous market updates, the 1.272 fib extension on the daily was hit around the 1093 area. From the weekly time frame, we hit the 1:272 fib extension at the 1101.75 area (see chart below). This is 2.75 points from recent highs (1099). This measurement is taken from the 11/2008 swing high at 1008.50 to lows (665.75). If the rising wedge we are currently in holds, I am looking at the 1.618 fib extension at 1220 area as a target. However, if we continue to fall (as the overbought and falling stochastic is suggesting), the next key area of support to watch is the 1008.50 area. See next chart below for more levels to watch...
Long-term Bullish Scenario #1 (no new lows): Based off the initial fall off the 11/2008 swing high (left arrow) we have some potential targets (with a bounce to new highs). What is nice about these levels is they line up well with previous pivots. To prevent clutter, see next chart below...
The chart below has the same levels as the above chart, but points of alignment with past swing highs/lows noted. This alignment helps the case that these are important levels and are levels to watch if reached. The 829.50 also lines up well with the 0.618 retracement from lows to highs at 831.25 (not shown).
Long-term Bullish Scenario #2 (no new lows): Taking a measurement of the full move off the 11/2008 swing high, we have a target at 756.25 (which also lines up with the 0.786 retracement at 758.50 and 11/2008 lows at 739). The 1.272 fib extension lines up well the the lows. To make things even more interesting, the 756 area shown in the chart below lines up with the 1.272 fib extension in the chart above at 756!
Long-term Bearish Scenario (new lows): If we fail to bounce and instead make it to new lows, below are some potential targets. Notice the 0.618 level lines up with the 830 area mentioned on charts above.
ES Monthly: Looking at the larger picture, we have additional confluence at the 544 area, which is very near the 547 target shown in the chart above.
$SPX Monthly: In order to get an even larger perspective (and view more historical data), we look at the S&P index ($SPX). Taking a measurement from the historically important, 1987 crash's lows we see the March 2009 lows and current prices line up well with common Fibonacci levels. Keep in mind the larger the time frame, the less precise these levels are. Also, we see the last 10 years have produced a prominent double top and "M" for Murder formation. Typically, this is bearish (on smaller time frames).
Keep in mind that confluence at particular levels don't necessarily mean price will get there. But if price does get there, the confluence makes it all the more important. It is too soon to determine which scenario will play out (if any), but it is useful to have a game plan. Of course, if we make new highs (above 1099) before one of these scenarios play out, all these measurements will need to re-evaluated.
Good hunting traders!