$SPX $ES #trading setup
Gun to my head, but I will still tell you the structure off the Oct’22 low looks like a corrective garbage:
The move up off the Oct’22 low really has a clean (w) up, (x) down, (y) up structure.
Interesting that ES approached an area where two 100% extensions form a cluster.
First, 100% ext of the wave (w) up = 4,491. Today ES stopped at 4,485.50.
Second, a 100% ext of the subwave -a- of wave (y) points to 4,464.
Finally, 4,454 is the Aug’22 high.
Now let’s zoom in to check if we could count five completed micro waves up in that rally:
(i) Less Reliable bearish count” the top has been made”:
The main problem of that count is a miniscule wave iv down.
It is more reasonable to assume that today only the micro wave iii up has topped:
(ii) More Probable Bullish micro count “one more higher high”:
When we deal with long term chart for futures we face a problem. Every charting platform uses its own way to glue expired contracts to each other to show price of so called continuous contract.
For, example, Trade station shows totally different numbers for the tops and bottoms in comparison to what you can see in Tradingview. However, they have minimal difference when it comes to the cash index SPX.
Now look at the cash index SPX, it has a clean bearish look:
Note that today SPX hit a 138.2% ext of teh subwave A up of the wave (B) up.
Note, that SPX spiked over the critical resistance, a 66.7% retracement of the decline off the top made in Jan’22 to the low made in Oct’22. It is allowed for bull to overshoot that level for a short period of time. That would not be qualified as an invalidation of the bearish count. But that means bears really have to push S&P back under 4,382 in 1 -2 days. The Aug’22 high in S&P was 4,325.28. Bears need to push SPX under that level to trigger a failed breakout setup.
For the SPX cash index: the first strong micro support is close[2], the lowest out of two recent daily closes = 4,372.59. Bears need to close a day under that level to trigger a 2-close bearish reversal setup.
For the ES-mini Sep’23 contract: the first strong micro support is close[2], the lowest out of two recent daily closes = 4,421.75. Bears need to close a day under that level to trigger a 2-close bearish reversal setup. Until that happens bulls will remain under control and can attempt to push ES/SPX even higher.
A failed attempt of bears to break under 4,421.75 support in ES-mini can be considered as a long setup and a strong argument in favor of the at least one more push higher scenario shown above.
A daily close under 4,421.75 would be an argument in favor of the bearish scenario.