The attempt to rally last night failed when the index had moved up between 1/4 and 3/8 of Wednesday's range down, which is an indication of there being some strength to this move down.
Yesterday I noted that if 1/4 retracement of the move up since 2 September (the level being 1058.11) failed that would suggest that the fast move since 2 September has lost strength. Last night was the first time that level has given way since 2 September.
I also noted yesterday that 1046.46 was a 38.2% retracement of the move up since 2 September and needed to hold to keep the move up since 2 September intact.
The low last night was 1045.85 which was a marginal breach of the 38.2% retracement and that breach was only of a very short duration in time, so eventhough there has been damage done to the move up since 2 September, it is not terminal.
For my mind, we shouldn't go lower here if we are heading up into 90 days on Friday 2 October or Monday, 5 October (4 October being a Sunday), but could go down to 1027.44 and still blow off before Friday, 16 October.
Imo 1027.44 needs to hold if there is going to be a blow off top in the first half of next month.
So far, the range down from Wednesday's high of 1080.15 to this morning's low of 1045.85 is 34.3 points.
Given the price action last night, here are the levels that I will be watching now and why:
1054.43 is 1/4 of the 2 day move down. Any attempt to rally that failed at this level would be a good indication of the move down remaining intact and probably gaining strength as last night failed at a higher level and bouncing off the 38.2% level should give us more upside than that, or that fib level is not as significant as it should be if the move up since 2 September is to continue.
1058.95 is 38.2% of the move down. An attempt to rally that failed at or above this level would suggest the move down is not gaining strength and I would say there would probably be some consolidation before going either way.
1063 is half the move down. Getting above this level would suggest to me that the move down is probably complete. I would then be going back to the daily for a better picture of where the index is at.
It may be that the three levels above and 1046.46 (38.2% retracement of the move up 2 September to Wednesday) play against each other for a day or two.
Turning down so close to 1082 (1/4 extension of the rally 8 July to 28 August) and the large outside down day with follow last night would spell "Trouble" but for the saving grace of 1046.46 being only marginally breached last night, so the price action at those three levels above should shed some light on what is going on atm.
(20min delay)