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Thursday 1 December 2016

The Three Little Bear Patterns

Bears managed to do some damage yesterday and the retracement I was projecting this week is in progress. I was calling the final pattern targets on my premarket video that I posted for Daily Video Service subscribers at theartofchart.net this morning before the open. The charts I was showing in the video are below and I'm looking at where each index is respectively in terms of their pattern target.

The final pattern on ES is a double top looking for 2178.5 on a sustained break below 2196.25. The current LOD is at 2187.50, so there still should be another nine handles of downside to make the target. That may be tomorrow though of course. ES Dec 60min chart:
Another double top on NQ, this one had already broken down with a target in the 4760 area. The current LOD is at 4726.25 so that has already made target and then some. That pattern is now historic but I'd note that the conviction break below the 61.8% fib retrace of the wedge opens a weaker target at a full retracement of the wedge at 4672. That target may be hit as ES and TF make their pattern targets. NQ Dec 60min chart:
On TF the pattern was an H&S of course and that had also broken down by the time I did the charts. That H&S target is at 1307, with the LOD currently at 1312.8, so as with ES, there is still some way to go. TF Dec 60min chart:
While there's never any such thing as certainty in analysis or trading, I'm expecting ES and TF to make their targets too and if ES gets down to 2178.5 I will at least be wondering about the unfinished business below at the triangle thrust retrace target in the 2168-70 area. That is a very high probability target to be made in the next few months, and for that reason I'd prefer not to see that reached on this retracement, as I'm expecting a push to new all time highs to start soon, and wherever that push lands, I'd prefer to still have unfinished business at 2168-70 at that point as a high probability magnet for the move down that should follow that high.

As we reach these pattern targets though, I'll be actively looking for a low setup to go long these indices. The odds favor a Santa Rally for most or all of December.

Just a reminder that Stan and I are doing our monthly free and public Chart Chat webinar at theartofchart.net on Sunday. For some reason I still don't have the link for that yet, but that will definitely be on tomorrow's post, so if you enjoy top quality TA, or you just feel that having an insight into the higher probability paths for price on the 35-40 trading instruments that we cover there might assist your trading, then I'd suggest using the link in my post tomorrow to sign up for that.

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