ES/SPX – Bears May Get a Short Setup for a 300 Point Drop

$ES $SPX #DAILY #micro #i down – ii up setup

Last week I noted that SPX was approaching a fat unfilled gap up left by a runaway October rally. On Friday we hit that gap up and started to consolidate:

Let’s zoom out and look at a daily chart of ES-mini:

Last week ES-mini dropped under a bearish ascending wedge, a corrective consolidation in between of two converging blue trendlines.

Bears pushed the price under the lower edge of the wedge confirming completion of the October – November corrective bounce. Then bulls attempted to turn price up, they produced a spike to a higher high but then failed to hold to new highs and price dropped back under the lower edge of the wedge and then to a new lower low. I count the drop off the highs made last week as a micro wave -i- of a new five wave down move to a new lower low under the low made in October 2022.

When this consolidation in a micro wave -ii- up gets completed, we should get a strong drop in a micro wave -iii- down with the first target at 3,600.

Ideally I would like to get a bigger pullback/consolidation to top at the Red Supply zone that starts at 3,940sh. A failed attempt to reclaim 3,945 would be an attractive short setup for a drop down to 3,600.

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