Where Are We Going From Here?

The 1065 level I mentioned yesterday was hit on the ES early this morning. I am currently flat and neutral in my bias. My neutrality however is only in this moment. I am still bearish in the bigger picture. I will be cautious moving forward, but there is a strong chance the ES trades below 1050 and possibly tests the prior lows. I say this for a couple of reasons. One, we have crossed below gap window from back on June 10th. So if we do confirm below 1065 the next level of support will be 1055. Official gap fill will be 1050.50. Two, if you use a Keltner channel indicator on a daily chart for the ES, you can see we are poised to move towards the bottom of the channel. That suggests a potential target range between 1037 and 1050. Prior low on the ES is 1034.40.

If we do move down below 1040 to retest prior lows, it will be the third time doing so. In that case we cannot rule out the possibility of making new lows on the third attempt. It will be tricky trading as we move back down and attempt to find the low, so you must be very careful. We'll see how today's trading goes and see if we get a consolidation day or if we see the decline continue further into the weekend. I'll try and comment again as this day's trading reveals a little more...