ST trend: neutral (pullback to ML likely)
Yesterday we were noting that the ST trend was neutral as FGSI was showing that neither side was in control. Buyers had won ML, but were not able to put some distance to it and with bearish EE on FGSI, there was no clarity to the resume of the up trend. We also noted that "On the sellers' side, they want to break below ML and macro-ML. Yesterday's lows are the last resort defense for buyers, if those are broken, then we likely sell-off directly and could potentially see much lower lows". Sellers did manage to step in hard just prior to RTH open and once macro-ML was lost we sold directly to test the prior day lows. That is where sellers lost the battle. They tested those lows and came within half a point to break them, but failed. Buyers stepped in and launched a rocket never looking back and after winning back ML and macro-ML then proceeded to break the prior day highs. Truly impressive reversal from the edge of the cliff.
The o/n saw the usual pattern that follows an up squeeze set up on FGSI. Price moved sideways consolidating, then when FGSI flashed warning signals that buyers are inefficient, we saw a larger drop which is likely targeting a ML back-test. That is where things will get decided again. So on the downside ML and macro-ML are the lines to watch, while on the upside, buyers would need to win back danny and 400bar MA to signal a resume of the up trend.
As a side note: on the big picture view, as discussed extensively in the members chat room, the EWT and cycle turn dates suggest an important high is close. On EWT terms the current move off the 4070ish lows looks like 3 waves up so far. So the normal expectation is that the current retrace is wave 4, which will then be reversed to new highs. Wave 4 cannot overlap wave 1, so macro-ML becomes important also from an EWT point of view as it is very close to that high. After this 5 waves complete (if that plays out), the danger for buyers would increase exponentially as it is possible the entire rally off 3811 low is done and we could revisit those lows soon.
ST trend: down (with bottoming attempt ongoing)
On Friday we noted that the ST trend was down as sellers pushed prices to lows at the all important 4280 lvl and then rejected price at ML. We mentioned that ML might be back-tested again and also that "bounces are sell opportunities, until proven otherwise". Both came to pass, ML was back-tested and price rejected there once again and sold off to retest the lows, before bouncing back near ML, holding there until the close.
Sunday saw yet another gap down and flush move, as the optimism that the Russia-Ukraine conflict would get solved over the w/e didn't come to pass. We broke Friday's o/n lows and reached 4240 before buyers finally stepped in and bounce price right back to ML. Now we are directly in a big inflection area at ML. Buyers overshoot it, but failed to put some distance to it. So this can be yet another ML back-test which rejects price. ML has proven to be a brick wall of resistance so far, so that would not be surprising. If buyers manage to hold price above ML and keep pushing higher to put some distance to ML, then we might have at least a ST bottom at the o/n lows. Next could of hours and especially how market acts after RTH open will be key for that.