As we approach the weekly close, it's worth comparing Wednesday's reversal to similar patterns in the past. I looked for days that marked at least a new 60 day low in the SP futures and a low that was down at least 1% from the prior day's close. From there, I stipulated that the SP futures reversed to close above the prior day's high (as was the case Wednesday).
Interestingly, there were just four occurrences and each marked an important low: November and December 1991 as well as July and October 2002. In the chart below, I've circled the dates that matched the criteria above.
My take from this is simple: the SP never closed back below the low of the reversal bar over the near term. So, Wednesday's low is clearly the key level. With regard to Wednesday's range, a 50% retracement is 1087.50 in the SPM and the Q1 low is 1085. For me, I'm using that range (1085-1087.50) as the line in the sand.
Good luck and remember that past performance does not indicate future results.
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