$ES: This Rally Should Set Up a Bulls’ Trap

$ES #ES #trading setup #Elliott Wave

Let’s refresh the big picture looking at the weekly chart below:

My primary scenario assumes that ES-mini made a lasting top in late July 2023. And I consider this rally as a corrective bounce.

We keep watching the same macro bearish Head and Shoulders structure where this rally may complete the Right Shoulder with a double top formation at the Red Target Box.

Now let’s zoom-in to a 15 min chart:

On this chart you can see one repeating pattern that played out twice. I never say that but believe me if you learn that pattern it can make you rich.

Note the congestion zone 4,420 – 4,415. Price broke over that zone but then produced a flat a-b-c move down to tag that zone from above. Such an a-b-c move down, a flat consolidation over the freshly broken resistance always creates a rock solid base for another rally (look at the the low labelled -b-).

Now look what happened next. Another push up to a higher high. I kept saying that the critical resistance was 4,440. Price broke over 4,440. And bears could push it back under that level and trigger a failed breakout setup. But bulls managed to stop that decline over that 4,4440 – 4,430 zone. Note what used to be the red supply zone turned into the green demand zone. Why? How that happened? Because of the rule: a flat a-b-c shaped pullback that finds support at the freshly violated resistance is a continuation pattern. It’s a reliable long setup.

I would say that this is the most reliable pattern I can ever teach you.

BONUS: The Very Bearish Scenario.

We still can argue that the very bearish scenario is still alive:

Any wave (b) of wave (iii) down normally comes as a large flat -a- up, -b- down. -c- up consolidation, a pause in the middle of a large decline in a wave ( iii )

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