$ES #ES-mini #trading setup #Elliott Wave
This is how a macro bearish wave count looks like for the cash index S&P 500:
To trigger that bearish macro scenario bears need to push SPX back under the Aug 22 high = 4,325.
This is how the bearish macro scenario looks like for ES-mini futures:
The problem for bears is that they failed to defend the critical resistance at 66.7% retracement fib = 4,378.25 (data for a continuous ES-mini contract from Tradingview). Bears really need to push ES back under 4,378.25 to revive that scenario and they have to do that quickly. The longer bulls hold ES over that level the higher probability is that that move is a much more than a bounce that temporary overshot the key resistance.
However, even after violation of the very important resistance at 66.7% retracement we still can consider this rally a corrective bounce.
Nasdaq composite index had a very similar structure in 2022:
It made three pushes down and then started a crazy strong impulsive bounce retracing 85.4% of the preceding decline.
Let’s come back to the chart of ES-mini. My main problem with any bullish count off the Oct 2022 low is that we can not count the Oct low as a long time bottom:
To count a low as a major bottom and a completion point of a corrective structure we need to get either a two or a two wave decline. Instead we got three waves down that does not look like a completed corrective structure. In a similar structure Nasdaq composite played a short squeeze retracing 85.4% of the preceding decline off the Nov’21 high. If ES follows that path that rally may extend up to 4,622.75 retesting the March 22 high.
Below I show you a potential bullish path for extension of this bounce up to 4,600:
Lets come back again to Nasdaq Composite chart and focus of a micro structure of the March 2022 rally:
I would note three details of that fractal that we will later apply to this rally in ES-mini:
(i) a micro wave iii up topped at 200% ext of a micro wave i up, and
(ii) the wave iv down had a clean a-b-c micro structure but retraced only 20% of the wave iii up, a very shallow pullback that had a clean a-b-c structure, and
(iii) the final wave v up topped at 261.8% ext of a micro wave i up.
Now lets look at the structure of the rally in ES-mini futures:
So far the rally in ES-mini stopped at the very same 200% ext of its micro wave i up.
If it keeps following that fractal, then we are going to get a reversal at 4,124 (a 20% retracement fib applied to the rally in a micro wave iii up).
Under that fractal played by Nasdaq composite in March 2022, upon completion of a flat a down, b up, c down consolidation over 4,110 bulls may push ES up to 4,587.
In conclusion:
- in theory bears have chance to trigger a very bearish reversal pattern but to do that they have to keep pushing down and trigger a failed breakout setup by pushing under 4,378.
- if, in contrast, we get a very shallow flat a-b-c consolidation over 4,400 that would most likely set the stage for another 180 point rally in a micro wave v up.
- As you can see, I still do not have a purely bullish count that would allow bulls to push ES to new all time high.
- At this moment I only consider a possibility for extension of that corrective bounce. Upon completion of the bounce we should expect a strong decline to make lower lows.