Tuesday’s trade was easier to trade as the ES and the NQ continue to trend lower. While the over patterns remain A-B-C and variations thereof. The “C” waves are always going to be 5 waves and when trending it adds an intentional kick to the directional trend. The smaller minute wave 2 completed overnight during Globex with both the ES and NQ picking up the decline again with what I call “purpose.” Both markets broke below Sunday’s Globex lows and reached next support at 3983 to 4000 in the ES and 12255 to 12350.
The wave pattern in both counts suggests the 3rd waves continue and are subdividing as expected. We are in the process of several 5 wave declines within the larger 5 wave decline.
For tomorrow, rallies should continue to be held to the 20 and 50 MA’s and also more or less the 38.2% Fibonacci retracements. Expectations would be for additional strength to the downside with a break below 12000 next up. Next Fibonacci support shows a “cluster” around 12092 to 12027 with 11954 anchoring the “cluster” in the NQ and 3924 to 3910 with 3862 to 3855 being the anchor for the cluster in the ES.
Ultimately the ES and NQ should find lows to complete Intermediate wave 1 before a more sustained larger bounce begins as Intermediate wave 2 unfolds. I give the Fibonacci levels for both the ES and NQ for the completion of Minor 3 waves down.