#ES #ES-mini futures #Daily #Macro #Trading setup
I count the whole structure of the decline off the top made in Jan 2022 as a complex Double Three structure:
That type of a corrective structures is composed if two large A-B-C down structures. To complete that structure we ned to get at least one more move down in wave (C). It can bet structured as a three wave decline or a five wave decline and it should make a new lower low.
Let’s zoom in to see details of the micro structure of the move up off the Oct 22 low:
We should make several important observations:
1. The move up was shaped as an ascending bearish wedge and that wedge got broken.
2. ES dropped under 8 EMA (the blue line) and 21 EMA (the thick blue line) and now is about to test them from below. Please remember that 21 EMA/20 SMA is a widely watched borderline dividing a bull market from a bear market.
3. We can clearly see that the move up off the Oct 22 lows had an (a) up, (b) down, (c) up structure.
Now let’s check how the previous decline off the Aug’22 top hast started:
Look at the upper right corner of that chart.
You can see a repeating pattern. A decline that lasted five trading sessions and that was followed by a two day wonder, a pullback making a lower high. There was a short setup that was triggered on Aug 26th.
I call it the “Minus 3 Plus 2”.
When we get a three of four consecutive lower lows on Daily or Weekly, quite often bulls step it and produce a pullback.
Such a pullback is normally able to make two consecutive higher highs. Quite often as soon as price makes the second consecutive higher high in the morning bulls run out of steam, bears step in and turn price back down.
We can get that same “Minus 3 Plus 2” short setup tomorrow morning if bulls make a higher high over the Thursday high made at 4,008.50 (March 2023 contract).
I expect to get a five wave down structure off the top made by ES at 4,141 on Dec 1st. So far we have got micro waves -i- down, -ii- up, subwave -a- of wave -iii- down. And I count this move up as a subwave -b- up of wave -iii- down.
I count this rally as subwave c of wave y of -b- of -iii-.
It is approaching a meaningful resistance at 41.4% retracement of the preceding five wave down decline = 4,016.
The key support for bears to crack is 3,992.
Under that count, there are two targets for the next leg down:
target 1 = 3,850, and
taret 2 = 3,780.