Let’s have a look at the December ES daily chart:

Click on image to enlarge!

I’ve used green trendlines to show the recent corrective declines since the August low. Measuring each high to low in those declines and projecting from the current daily swing high established this past Tuesday shows that a similar decline should terminate between 1198 – 1199.50. If the market closes below that zone, it would indicate that the strength and rhythm of the current uptrend has been compromised. This often leads to a deeper downside move.

In our chat room, we use the 45 minute ES chart to determine intraday trend. Very often, specific patterns on this chart will give us a heads up regarding daily trend as well. Here’s the current scenario:

Click on image to enlarge!

The decline of the last 2 days stopped at the 1.272 target extension of the last move into the high, exactly – to the tick. This is a powerful spot to look for the rally to resume if this was just a corrective decline. This level also comes in right on top of our key daily support symmetry as discussed above. While this led to long side trades for those of us working intraday, the key .786 resistance at 1219.75 remains intact. We’d need a break of that level to cal the 1231.00 target into play. We’re seeing a drop pre market today, but current price as of this writing is holding above the key .786 support at 1205 too. If this support breaks, the downside targets are 1.272 – 1.618 of yesterday’s low to high. Those targets are labeled on the chart above. Meeting those targets also shows the potential for a Gartley support pattern as shown in the chart below:

Click on image to enlarge!

This is an A-B-C-D corrective move, a zig zag, taking advantage of very specific Fibonacci ratios to reinforce the possibility of the downside targets holding as support. This pattern also coincides with the daily support zone.

Conclusion: If we see a break below 1205, for the daily pattern to hold to upside we’d need this Gartley support pattern to hold for a close above the key daily support levels, 1198 – 1199.50.

For more from Mark including his “Chart of the Day”, visit MJBraun.net.