Two weeks ago I wrote about how the S&P cash index daily chart showed a series of Fibonacci Timing factors which would amplify the strength of price resistance. Here’s the daily chart posted then:

Click on image to enlarge!

In the article, published on this site on April 22nd, I reviewed the methods used to project this high, and summarized by saying that if the pattern was going to repeat we’d see a swing high established between April 21st and 23rd. We always need to add a +/- factor of 1 bar to these projections, since there’s sometimes a final push before price failure. That’s what happened in this case. The last day of the timing projections landed on a Friday, and the last gasp of the rally came in early the following Monday morning, April 26th.

Here’s a look at the current weekly chart showing the price resistance to go along with the timing projections:

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How far will this decline go? Let’s switch to the ES (CME eMini S&P futures contract) in order to examine a few factors. Here’s the current daily chart:

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Yesterday price reached the downside target calculated by multiplying the last swing into the high by 1.618, one of our strongest Fibonacci ratios. This is often the place where the more powerful upside trend will resume. There’s also an overlapping 100 percent projection of a prior corrective decline, indicating that the market has declined by this degree once before during the rally from last year’s low and managed to recover. So if the upside pattern is going to maintain the same degree of strength that it has in the recent past, we’ve reached a good place for the rally to resume.

One last chart, the current 45 minute ES:

Click on image to enlarge!

We use this chart for intraday trading in my chat room, but it also provides powerful clues regarding longer term trend. There have been intraday support breaks pointing to the next downside target labeled at 1129. The rhythm of the downside pattern is represented by the labeled resistance levels. The combination of a lower downside target in play on shorter term versus the strength of daily support makes it likely that we’ll see some consolidation and chop at the current lows. If we start to see the strong intraday resistance break on bounces, it would be an indication that our daily support has terminated the decline and that new swing highs are in store on the daily as well. Since this would lead to a weekly resistance break, there would be additional upside in store beyond the next daily targets too. Resistance holding instead would mean that the daily support is just a point of debate before we see additional downside though, so we’ll monitor price action carefully at those levels!

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