Market Showing Some Signs Of Life But Still No Confirmation Of A Bottom Just Yet
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Today we saw the market continue to push higher off of the lows that were struck yesterday. We have, however, yet to see a strong breakout over resistance nor a sharp reversal that we would expect to see once an ending diagonal ends. So for that reason and until we see a breakout over resistance and that sharp reaction we still cannot say with a high degree of confidence that even a local bottom has been struck just yet.
Bigger picture, there really has not been any changes to the count as we are still trading over the lows that were struck yesterday. Drilling down to the 3 min chart, I am going to be watching the 5681 level as a key breakout level. If we can manage to break over that level and see continued follow-through up towards the 5800-5984 zone then it would signal that we have indeed put in at least a local bottom.
Again, because this last move down is likely an ending diagonal, when this does reverse the move higher should be quite sharp and swift. The fact that we have not seen that sharp reversal yet and that we are under even micro resistance still leaves the door open to seeing another lower low before any sort of lasting bottom is seen.
If we do indeed move under the low that was struck yesterday, I would be looking into the 5494-5450 region for the next area to find a local bottom, as these are the next two major fib levels that I am watching below.
As we move into the final two trading days of the week we need to keep a close eye on the overhead resistance zone to give us that signal that a local bottom has indeed been struck which should be followed up with a sharp move higher back signaling that the market has indeed put in at least a local bottom. For now, we still need to remain cautious as the market still has some work to do before we can say that this move down off of the all-time has at least come to a local bottom.
