Back on 3/26, I was like most people and felt the rally was done and we were poised for a fall. Being that we are market reactors versus market predictors, we need to be prepared for whatever happens. The unlikely scenario described in this post put a next target at the 930 area. Well, we're here. So what now? It's very interesting that we hit this area right as bank stress tests are released.
Due to the extended move down, we can take a fib retracement from low to low. Below is a weekly ES continuous contract chart, illustrating we are at a 50% retracement, with a potential target at 539.
As mentioned in the 3/26 post, we are at the 1.272 fib extension of the last rally we saw in late 2008 to the beginning of 2009. If this 1.272 level doesn't hold, the next stop could be the 1.618 level (995).
We also can't ignore the simple, double-top situation from Jan 2009 that could offer some resistance.
Good hunting traders!
Lesson