$ES #ES-mini #trading setup #Elliott Wave analysis
I think we have been dealing with a large corrective pullback off the October 2022 low.
Every corrective pullback normally has two legs.
The first leg in subwave (a) up or (w) up was structured as an -a-b-c- up structure.
The first leg in subwave (a) up or (w) up was structured as an -a-b-c- up structure (see the chart above).
When we deal with corrective pullback unfortunately we can hardly predict if the second leg up will be shaped as a three wave or a five wave structure.
The second leg up in that (a) up, (b) down, (c) structure started in mid March 2023 when FED injected huge amount of liquidity in connection to the bank insolvency crisis in the USA:
That chart above shows my primary Scenario (1) the Least Bullish Wave Count.
Under that scenario bulls have only one push left in a subwave -c- of wave -v- up that can stretch well over 4,200.
That Scenario (1) is based on two assumptions (i) that the second leg up that started in the middle of March 2023 would be structured as a five wave up and (ii) on the assumption that the wave -iii- up topped in early April.
Before I post two much more bullish scenarios 2 and 3 let me post again the structure of the first leg up off the October 2022 low:
You can see a strong rally in a subwave a of wave v up that looks identical to the rally we got on Thursday.
The coming start of a month would be the ideal time to get a deep pullback in a subwave b down of wave v up, followed by a spike up in a subwave c of wave v up to 4,215 – 4,225, followed by a strong decline in a subwave a down to test 4,096 support once again (ideally undershooting it).
Scenario (2): the Most Bullish scenario: The five wave up structure where the micro wave -iii- up has not topped yet:
Under the most bullish scenario the Friday rally was only the very first micro eave i up in a new five wave up leg targeting 4,390. That scenario looks a way too bullish to me.
Scenario (3) The Moderate Bullish, (w)-(x)-(y) structure.
At the beginning of this update I noted that the first leg up that started in October 2022 and topped in December 2022 was structured as a three wave up move.
It is reasonable to expect that the second leg up that started in the middle of March 2023 would be also structured as a three wave up. When a corrective structure is shaped as three waves up, three waves down and then three waves up we call it the Double Three and label waves as (w) up, (x) down, (y) up.
Under that 3-3-3 or (w)-(x)-(y) up scenario the rally that topped in early April was only the first half of the second leg up, a subwave -a- of a wave (y) up. Therefore, the rally that started on Thursday – Friday was the beginning of the second half of that wave (y) up, its subwave -c- up.
Under that count, the subwave -c- of wave (y) up should stretch to 123.6% – 138.2% ext of the subwave -a- up. That implies two long term targets: 4,511 and 4,560.
And here again I should confess that I hardly can envision such a strong rally. At this point I favor the Scenario 1 with a limited upside left for bulls.
But even that least bullish scenario 1 may not bring relief to bears:
Ideally bears should re-test the thick red line rom above (4,140-4,130). Moreover, that subwave -b- down may get even more shallower if it gets shaped as a bullish Running Flat structure:
4,145-4,130 is a strong support.
Any pullback to that support would looks like a promising long setup.
To question those bullish scenarios bears need to push ES under 4,100.
At this point a move over 4,200 looks inevitable.
The only question what kind of a pullback e can get during the volatile period associated with teh first three trading days of a month.