$ES #ES-mini futures #trading setup #Harmonic Elliott Wave
ES has been squeezed in between of two converging green lights:
Quite often that type of consolidation patterns gets resolved by a fake breakout that creates a blow-off top that is followed by a brutal bearish reversal and accelerated plunge under the support of the lower green trend line.
Talking about that Bearish setup I would like to repeat what I said in the morning:
“Bears will consider a push up to 4,220 -4,240 as completion of the whole (a) up, (b) down, (c) up corrective structure off the October 2022 low. That means bears have arguments to believe one more push up would complete the large corrective W up, X down, C up structure off the major low made in June 2022. Therefore, bears will be expecting a new large leg down targeting 3,300 – 3,000. To complete the (a) up, (b) down, (c) up micro structure of the wave Y up bulls need to make a nominal new higher high over subwave (a) up and hit the minimum extension 66.7% of (a) = 4,240.
Even under the macro bearish count to complete that wave (y) up we really need to get a spike over 4,213.”
To find potential targets for a top we can apply an alternative forecasting method called “negative extension”.
We measure decline off the top of the wav iii up to the low made by the wave iv down (the thick dark red line on the chart above) and add -123.6%, -138.2%, and -176.4% projections of that decline. That forecasting method has already nailed the top of the previous spike up at 4,188 (-123.6% ext).
The next important level is -138.2% projection that returns a target at 4,199.
When bulls get euphoric they can push the final wave v up up to -176.4% ext = 4,227. That target 3 fits what I concluded this morning:
“The bullish count allows bulls to push higher up to the 4,213-4,223 level of a macro resistance 4,223 is the 50% retracement of the whole decline off the Jan’22 top.“
This is how a micro wave count looks like:
Bulls pushed ES-mini to 4,177, the Daily Resistance (as calculated by my Cycle Trader Indicator 24 hour in advance) and 76.4% ext of what could be counted as a micro wave i up. If bulls want to play the blow-off top they need to act overnight and push ES over that resistance 4,177.
That 76.4% extension is normally the first micro resistance. That is the test for bulls. Either they push higher and confirm its a wave iii or price turns down and breaks the support confirming that move up was just a corrective bounce.
Break under 4,138 would most likely bury this bullish count and open the door for a large pullback that we have been waiting for.
As long as bulls hold ES over that support 4,138 bulls will be in control and will keep pushing ES higher towards the targets:
(i) the target 1 for this micro wave iii up is 4,201, and
(ii) the target 2 for a wave v up is 4,215.
Let me quickly remind you about the main difference between the Macro Bullish and the Macro Bearish scenarios.
The Macro bullish scenario has the same short term path that argues for one more push higher to 4,200 that would be followed by a larger pullback:
The difference between the bearish scenario and the bullish one is that the bullish scenario considers the upcoming top as only a temporary top in a subwave -a- up to be followed by a deep retracement in a subwave -b- down targeting 4,065 – 4,035.
Under the macro bullish scenario that drop in a subwave -b- down would be followed by another a-b-c move up that can stretch as high as 4,440.
The Macro bullish scenario has the same short term path that argues for one more push higher to 4,200 that would be followed by a larger pullback.