Mixed messages from Ben Bernanke and the Fed was enough excuse for some algo traders to trigger their sell buttons, designed to run-over trailing stop-losses of those holding long positions, and it did, causing fast liquidation decline, erasing the previous five days of rally in just a few hours, resulting in a large bearish reversal day.
From a wave structure perspective, the decline looks like wave 1-2-3 down, with the end of day profit-taking rally as wave 4. If so, the pullback wave 4 up should not clearly violates 3010 resistance zone, and then move back down to below Wednesday low. A decline below Wednesday low implies wave 5 down is in progress, and once completed, a large ABC rally back up is to expected.
From a wave structure perspective, the decline looks like wave 1-2-3 down, with the end of day profit-taking rally as wave 4. If so, the pullback wave 4 up should not clearly violates 3010 resistance zone, and then move back down to below Wednesday low. A decline below Wednesday low implies wave 5 down is in progress, and once completed, a large ABC rally back up is to expected.
As long as Wednesday high is not violated, Wednesday bearish reversal day should continue, going forward, the trade will be Sell Rallies as long as resistance levels, 3010, 3020 and 3032 are not violated.
Pullback rally resistance for ES are 1660, 1666 and 1670-1672.
Only a clear and sustained break above 3032 for NQ and 1672 for ES would change the trade direction back to Buy the Decline mode
