$ES #ES-mini futures #trading setup #Running Flat
Yesterday I shared expectations for a bounce off the green target box.
This is how it played out:
This morning bears only slightly undershot the Green Box but doing that they got exhausted. Then bulls stepped in and produced a rally we expected. Because bears managed to undershoot the Green Box I had to move down my Red Target box for that rally.
We can not be sure at this point that the rally in subwave -c- up topped at close today until price drops back under 3,942. Theoretically bulls can push ES higher one more time to 4,000.
Either ES-mini makes a higher high or not bears got a foundation for another strong move down because we got a corrective -a- up, -b- down, -c- up structure.
Its very important to note that the -a-b-c up structure was shaped as the Running Flat structure. That type of corrective pullback confirms very strong underlying bearish momentum because:
(i) a corrective subwave -b- down makes a lower low under the starting point of subwave -a- up, and
(ii) the second leg up in subwave -c- up makes a lower high under the hign made by the subwave -a- up.
So even in a course of a corrective pullback when bulls are supposed to be in control the price continues making lower lows and lower highs.
The main trigger for starting the next large leg down is violation of the last lows made at 3,925 this morning. We can not be sure at this point that the rally in subwave -c- up topped at close today until price drops back under 3,942.
Now let’s zoom out to see a bigger picture:
Upon completion of a corrective consolidation in subwave -b- up of wave -iii- down we should expect the strongest part of a five wave down structure, its subwave -c- of wave -iii- down.
That bearish wave count allows bears to attack 3,750 – 3,700 area in that subwave -c- of wave -iii- down. That new leg down may start overnight or next Monday.