First, the bigger intermediate range: Spot 2500 - 3150
The upmove from 2500 to 3150 had corrected by more than 62%.
50% lies at 2825
38% lies at 2905
Then, for 3150-2660 downmove, we have
38% = 2845
50% = 2905
62% = 2965
For 4 weeks from 15-Dec-08, there was sideways (rectangular movement) from 3150 to 2800 (150 pts).
It broke down during fist half of Jan-09, and nearly reached its target of 2650 (2800-150).
Now, we have a broad 4 week sideways movement of 200 points from 2870 to 2670.
It has taken a form of Inverted Head & shoulders pattern in Daily charts; and in weekly chart, we have an inside bar.
Thus, we have reached an inflection/saturation point where a breakout is imminent during the week 9-Feb to 13-Feb.
Even bollinger bands have contracted and signal a spike.
But in what direction:
Well, there has been a BEARISH CROSSOVER OF 20DSMA & 50DSMA. Such crossover had a very negative effect on previous 2 occasions - June 08 & Sept 08.
RSI(14) on EOD chart has reached a crucial RSR level of 50, as can be seen on chart - for bullish moves, it needs to sustain above 50.
EOD/60min charts and Above Fibonacci levels indicate 2900 to 2930 as a major hurdle.
If we consider the inverted H&S then, as per textbook, the right shoulder's low is key for such pattern's negation.
Such level is Spot 2755 which is 2day/3day/5day/weekly/Feb month's swing low...
So, tomorrow's price action at 2870-80 zone & reaction at 2900-2930 zone is important for setting the trend for rest of the week.
Still, no positional longs for me - all longs on intraday basis.
It would be a bad surprise for me if we close between 2800 & 2870 again tomorrow & a rude shock if it happens again on Tuesday.