While it would be premature to call this a downside reversal, there are some strong price and time resistance factors in place on the daily Russell chart at the moment:

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669.70 is the 100 percent price projection of the May 6th low to the May 13th high. Since that was the first bounce after the April high, and it failed to take out that major high, this serves as significant resistance when projected from the current low. Timing factors are considerable as well. Yesterday was the Fibonacci timing target ratio, 1.618 of the 2 prior highs projected forward. It was also 100 percent of the prior high to low swing; same number of days in the decline as in this current rally. Plus the 21st was 1.272 times the prior low to high swing, projected from the start of the current rally; another powerful timing factor. When these timing ratios line up so closely, it’s important to take notice of the possibility of reversal, especially when combined with significant price levels. At the very least this calls for a “debate”; a temporary hold throughout these timing factors which actually extend into the start of next week.

As always, we’ll monitor the eMini Russell 2000 intraday charts in our chat room, with a focus on the 45 minute time period to show us whether or not this is just a corrective decline or something that’s potentially longer lasting:

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A break of 645.70, the .786 retracement of the last major low to high swing, would target 630.20. Since that target is the 1.272 ratio of the swing into the high, it may serve as powerful support and certainly would be a place to look for price to recover. If we actually drop through that level, it would open the door to a much more significant decline. Of course we’ll also monitor timing support factors on the way down in order to see if ratios on the time axis of the chart would serve to reinforce price support levels too.

For more from Mark including his “Chart of the Day”, visit MJBraun.net. Don’t miss Mark’s upcoming webinar on trading the Russell 2000 Mini Futures with Fibonacci and CCI during our Technical Traders Forum.