$ES #ES-mini #trading setup #trading futures #Elliott Wave
My primary macro scenario assumes that the rally off the 2009 low topped in Jan 2022:
Then we should expect a large (A)-(B)-(C) down corrective move. The 2022 decline that bottomed in Oct 2022 can be counted as a wave (A) down and the rally that followed can be counted as a corrective wave (B) up. If the 2023 rally topped in late July then we are watching start of a large leg down in a wave (C) down.
There are two tight clusters of fibs that can work as magnets/support levels for the second leg down in a wave (C).
Target / Macro Magnet 1 = 3,600. It is formed by a 76.4% ext of wave (A) down and a 30% retracement of the whole rally off teh 2009 low.
Target / Macro Magnet 2 = 2,790 – 2,750. It is formed by a 138.2% ext of wave (A) down and a 50% retracement of the whole rally off the 2009 low.
Can we be sure that the 2023 rally in a wave (B) up has topped?
Let’s switch to a Daily chart of ES-mini futures:
The key distinguishing feature of any corrective wave B is a three wave structure:
Consider the Elliott Wave theory as a collection of repeating patterns. You can always refer to the models, graphic visualization of those patterns.
There are two slight variations of that repeating fractal depending on a micro structure of the second leg down:
As you can see, the 2023 rally neatly followed the part of the model highlighted with the yellow rectangle (see the first model chart shown above). And you can see what normally happens when a corrective pullback in a wave B up tops out, we get the second leg down in a wave C down.
The second leg down may have a clean five wave down micro structure but in the majority of cases it would have a more complex three wave W-X-Y down structure (as shown above).
You can enroll into my video course that explains in details all the repeating patterns identified by the Harmonic Elliott Wave theory.
Let’s come back to the Daily chart:
The rule is “upon completion of a five wave up structure the low made by a pullback in a wave (iv) down works both as a magnet for the first pullback and a strong support”.
Therefore, the macro target 1 for the first (a)-(b)-(c) move down is 4,368, the low made by a micro wave (iv) down on June 26th, 2023.
If we get an a-b-c- down structure testing that support that would keep possibility for another rally after that pullback. If, in contrast, we will see extension of that decline without large pullbacks that would be a strong argument in favor of the macro bearish scenario where ES-mini completed the corrective wave (B) up in June 2023.
I explained those two scenarios in my previous macro update based on S&P cash index charts:
We keep watching two macro path, the bullish blue and the bearish red ones:
“…Under the blue bullish path an a-b-c move down to that green demand zone would be stopped by bulls and we would get another large move down targeting the Jan 2022 high. Under the red bearish path price would most likely drops down in a straight line fashion, violate 4,328 support and then after a brief consolidation would continue going down in a strong decline of a subwave (C) of wave (4)down targeting 3,600.”
“The main idea is that I expect price to test 4,400 main support in either of those two scenarios, the bullish and the bearish. If we get an a-b-c move down to that Strong Demand Zone that would be a great buying opportunity. In contrast, if we get a strong impulsive looking drop down to that area and ES-mini undercuts briefly 4,369 that drop would most likely confirm ES made a major top and started a large move down in the red wave (C) of (4) down shown above.”
I will post one more micro update tonight…