After having run up from 1325 to 1358 on Thursday and Friday, the market spent today trading in a narrower range, undergoing some apparent consolidation before the next move. The market made an initial drop this morning, completing a 5 wave sequence from 1358 at 1348.51, which proved to be the low for the day. A scenario is developing which would make 1393 the termination point of a 5 wave sequence from 1267, and 1348 is precisely the pullback needed for this scenario.
From that low, the market proceeded to form a sequence of 5 wave sequences making a series of lower highs, and higher lows. The market moved higher to 1357.26, lower to 1351.38, higher to 1356.70, and lower to 1351.83, before rising slightly off that low into the close.
The structure that has formed from the 1358 high indicates a powerful move is forthcoming, but has formed in such a way that leaves open the possibility of a breakout in either direction. A move above 1356.70 would indicate another move higher, with 1393 remaining the most likely target, and a break below 1351.83 most likely resulting in a strong move back to the downside.
Resistance is at 1357-1358, 1367, and 1387-1397. Support remains at 1338, 1323-1326, and 1313-1315.
I mentioned above that a scenario is developing in which a move to 1393 would complete a 5 wave sequence from 1267. Up until now I have been calling this wane 3 from 1267. Both scenarios are still possible, but I wanted to acknowledge the existence of both possibilities. Due to other commitments, I was unable to put out a weekend update as planned. Instead I will post a Medium Term Update in the next day or two that will outline each of the different scenarios.
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