With today's gap down below key support levels, this was the only message a trader needed: we are going down today; and so it went. Now, the question is: Is the drop over and can we resume our bear market rally? One look at the daily chart (top chart) says not likely. Think of it as a rock that has lost all upside momentum, came to a standstill, and started it's acceleration back towards earth. One day will likely not stop it. Instead, I think probabilities are high that we have a consolidation day tomorrow (looking at the last two candles on the hourly chart), then we resume our downwards path towards my targets. We nearly touched the 50% retracement level today on the ES, although the NQ was showing relative strength. I think we are likely to test the supporting trendline before we stop our fall and can move back towards the top.
These two scenarios are my best two guesses for tomorrow. Consolidation and a retest of 918 (#1) or a gap down selling climax (#2) with an intraday reversal.
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