The Fibonacci time and price resistance I discussed in last week’s article, and in the article posted here on April 22nd, has certainly paid off with a healthy corrective move to downside. While the market appears to be recovering strongly from last week’s sudden spike down, let’s look at key resistance factors between current price and new daily swing highs.

On this chart of daily SPX, I’ve plotted the retracements from the daily swing high to last week’s low:

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We know that once the .786 resistance retracement is broken, there’s a very high probability of the market extending to the corresponding target, 1.272 times the prior high to low swing. This puts the emphasis on the .786 level at 1186 as a key factor, particularly when this would result in a significant new swing high. Very often when a market attempts to make a new swing high, it fails at or very close to that level. Also, as of now the daily 50 CCI remains below zero and price is just touching the underside of the 34 period exponential moving average; both strong resistance points.

Stepping up to the weekly, we can see that making the daily target at 1261 would also break a significant price resistance zone. This is the area where price failed together with our daily timing resistance factors towards the end of last month:

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Here are the similar price resistance factors on the Dow cash index daily:

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The key resistance is at 10960.

And weekly:

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A scenario similar to what we’re seeing on SPX weekly; making a new daily swing high would break major resistance on longer term.

While there’s no guarantee that the .786 resistance levels on the daily charts will hold, we should be prepared for the possibility of a struggle at that point as these markets “debate” whether or not to bring new daily swing highs. We’ll watch 45 minute support on the corresponding futures charts in my chat room. So far all of the support that’s formed since last week’s low has held when tested on intraday pullbacks.

Here’s the current 45 minute CME eMini S&P (ES) chart:

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If we start to see breaks of the key labeled support it would lead to a pattern shift to downside on this timeframe. That would be the first sign of longer term resistance holding. However, if the 45 minute support continues to hold on each test, we remain focused on the long side. So while there’s still a major resistance factor to consider on longer term, we’re not going to try to pick a top. The market can show us if it’s reversing by shifting the pattern on shorter term charts!

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