The current price action occurring now, which does seem like there's a strong ' support-base' building....however I can only make a forward conclusion by what I see, and I only view 'support' as being valid during this Quarterly timeframe which will disappear in April and project lower prices....
DOW Cash and DOW Futures Weekly charts
At this stage US markets are range bound and with 2-weeks before Contact expiry, if Price is still trading below March 50% level there is probably going to a 2nd wave down into the next Quarter when this current 'Support' disppears.....
As mentioned in the Daily report this week on the 27th, the Weekly cycles are a 'sell', and they have pushed the market back down as they did in December 2007, and until prices are able to close above the 3-weekly highs then we should continue to view the markets as heading lower in each Quarterly timeframe.
"As the Weekly timeframe begins to 'tighten' and get smaller, there will be a breakout of the range, which will probably occur the closer it comes to the next contract expiry."DOW Daily
DOW Weekly ranges are getting tighter and we can see that for the next Wave down to occur there has to be a break of the Weekly lows. At this stage the Markets are still range bound between Weekly channels.
Friday's down-trending day has closed below the 3-day lows:- a change of the 3-day cycle and expectation is that price will swing upwards or consolidate for 2-days before the trend continues down.
The best Set-Up would be a rise UP towards March 50% level in the first few days next week hit the March 50% level and then move down into the Weekly lows.
Those Weekly lows are viewed as Support, but a break of these lows and the expectation is that price will begin to move down towards March lows....
DOW intra-day
The past few weeks on the DOW has been predictable in February:- it has been a consolidating monthly timeframe trading between Weekly channels, and when support failed in 1 day, the next day moved down into support and then rallied higher the next day.
On Thursday support had failed and the expectation was that price was moving down into Friday's support and the same pattern of a reversal up ('short-covering') . However 'support' had failed for the first time in many weeks, breaking the 5-day lows.
Therefore the expectation is the breakout of the 5-day lows on Friday, and price will try and push lower next week on Monday.
Normally the view is for price to rotate upwards:- lower Weekly open and break of the 3-day cycle would see a 2-day rotation upwards, but with Friday's breakout of the 5-day lows the expectation is to push lower on Monday into Weekly lows before any higher move or reversal pattern is going to play out.
S&P Weekly Cash and FuturesSame expectation is that market is currently supported around Quarterly lows, and with the expectation price is heading lower in the foreward timeframe.
E-mini Daily chartWe can see back in the 1st January 2008 when the same pattern of the Weekly breakout occured and the move down into January lows.
And this is the same pattern that we need to see to verify any continuation down into March lows.
And the same could be said on March 50% level and the breakout of the Weekly highs, if for some reason the Week before contract expiry moves higher, as often happens. (Buying support into contract expiry)....
Next Week:-Friday's breakout and expectation that a breakout of the 5-day lows and price will push lower on Monday....
Please read the daily report....
