ES Morning Update January 4th 2024

Good day for the bears yesterday but the RSI on the 6hr chart is getting close to oversold, so a bounce could happen at anytime now. The daily chart is still bearish and pointing down but not near oversold yet, which will continue to put downward pressure on the market.

The possible bounce from the 6hr RSI getting oversold will determine whether or not the trend truly has changed. If I’m right, and it has changed, then the bounce will be short lived, like intraday only. If I’m wrong it will be a mulitday rally from the oversold 6hr RSI. It’s just like the uptrend where overbought chart just went sideways to reset before taking another leg higher.

The same should be true on the downside where oversold short term charts go sideways to make a bear flag before breaking down lower. From a wave count point of view the move we have had down so far is likely just some Extra Tiny Wave 1, with any intraday bounce being the wave 2, which would all be inside Tiny Wave 1 down.

Have a blessed day.