“My expectation is for a continuation back towards the Weekly 50% level and move higher towards the new monthly 50% level in December before the next move down towards the December lows, as it follows the Dilernia Principle of a 2-timeframe wave pattern in lower lows before any major support and new UP trend can develop in 2008....
In Conclusion:- Major support in November has been found, expectation of a rotation upwards next week and into the end of the Month before December provides a 2nd wave down into December lows.
Support is only valid for the current timeframe, once November ends and December begins there will be a new path for price to follow and the same support won't be valid. (US Weekly report 24th November”)
DOW...
It all started off in October the first warning of a reversal. The Weekly
‘drops’ were forewarning weakness and the break of the Weekly 50% level confirmed the trend, and the continuation down that was clearly defined by the 3-day cycle and into the First reversal point:- the October 50% level.
After the 3-weeks of consolidation around the monthly 50% level, once price broke, the market path was already mapped towards the November lows before finding support, and this week moving in a counter-trend back towards the December 50% level.
The December 50% level in both markets is going to clearly define the trend.
There is such a large gap to the 3-day lows, that with the start of the new week (high probability of a 2-day reversal from a higher open) that the next 2-days on US markets are going to give a good idea about how the next 2 weeks of trading are going to play out.
Because around these higher timeframe 50% levels there is major resistance, and both markets are also trading below the Quarterly 50% level. The Secondary trend is bearish. In the SPI it hasn’t even come close to testing the same level.
Below the Quarterly 50% levels in both markets and there is more of a reason to reverse back down. However the closer it comes to contract expiry the more probability it will move above.
ES-minis
The exact same technical view as the DOW:- whilst below the December 50% level the trend is down, however the short term trend is up defined by the Weekly 50% levels and the 3-day cycle.
And with the closure of November the lower lows in December are not that drastic, it will be like re-testing the market, as a ‘double bottom’ completing the 2nd wave pattern (Dilernia Principle)
Previous US index Weekly report: - This week expectation was that the November lows would swing the market back upwards to the December 50% level and stall. Major resistance.
This US index Weekly report:- major resistance with a high probability that whilst price is trading below December 50% levels, the market will make a lower low. However this needs to be verified by the break of the Weekly 50% level and 3-day cycles, which might take a few days to unwind.
Short-Term:- higher Weekly open and expectation that there will be a 2-day stall reversal with the Weekly 50% levels a guide of the strength of the trend.
The closer it gets to December contract expiry the more chance it has of moving higher.
