$ES: A Micro Bounce Before the Drop?

  • CastAwayTrader
  • September 7, 2023
<<< Back to All Updates
<<< Macro Updates

$ES #ES-mini #trading setup #Head and Shoulders

On a macro chart everyone watches that huge Head and Shoulders bearish reversal pattern:

ES-mini Sep’23 contract, 240 min chart

This is how that Head and Shoulders is supposed to work:

!!! Please note that we are moving from expiring Sep’23 contract to ESZ23, a contract that will expire in Dec’23. Therefore, numbers will be different for Dec’23 contract (ESZ23):

ES-mini December contract, ESZ’23, 240 min chart

Every trader knows that look. And this is exactly why that pattern works as planned only in 50-60% of cases! Quite often price turns back up half way down the neckline, goes over the top of the red shoulder, invalidates the bearish reversal pattern and makes bears chase a new rally. What makes me cautios is the strength of the Red shoulder labelled B, that went much higher than the left shoulder.

But let’s assume for now it will play out as expected.

Now let’s look how the September decline looks like in Dec’23 contract:

ESZ23, Dec’23 contract, 15 min chart

We can count full five waves down off the last high made on Sep the 1st.

In the vast majority of cases, a completed five wave down structure is followed by a corrective a up, b down, c up bounce to 41.4% or 50% retracemenet of the completed down move.

It is possible that today we got the first leg of that corrective zig-zag, a subwave a up.

Upon completion of that a-b-c up bounce we should get the second leg down that will test the neckline located at the August low ( 4,400 for Dec’23 contract)

If bulls push ES over 4,540 that would be a very strong warning alert for bears.

Again, 50% of head and shoulders reversal patterns get invalidated.

Subscribe to Free Updates

Get Unlimited Access

PrevPrevious$ES: Macro Bearish Head and Shoulders
Next$ES: Bulls Produced a Bounce We Expected. Has it Topped?Next

More To Explore

$ES: Bears Have A Clean Setup

$ES #ELLIOTT WAVE #trading setup #short setup Bulls squeezed a slighly higher high on Thursday. But ES closed back under

CastAwayTrader May 9, 2025

$ES: Bears Failed to Break the Monthly Support

$ES #Month Opening Range Yesterday, I anticipated a classic “pump-and-dump” scenario following the FOMC announcement. However, that move didn’t materialize.

CastAwayTrader May 8, 2025

Important Disclaimer

CastAway Trader LLC, the publisher of this web-site and videos is not registered as an investment adviser nor a broker/dealer with either the U. S. Securities & Exchange Commission or any state securities regulatory authority. Users of the website www.castawaytrader.com and viewers of the videos are advised that all information presented on the website is solely for informational purposes, is not intended to be used as a personalized investment recommendation, and is not attuned to any specific portfolio or to any user’s particular investment needs or objectives.

Trading stocks, options, or futures carries a high level of risk, and may not be suitable for all investors. Before deciding to trade, you should carefully consider your objectives, financial situation, needs and level of experience. CastAway Trader LLC provides general overview of trading methods that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. All trading setups and/or trades presented in the web site and/or trading chat room by CastAway Trader an/or by other members of the chat should be considered hypothetical for educational purposes only and should not be expected to be replicated in a live trading account.

An investor could potentially lose all or more than the initial investment. You should not speculate with capital that you cannot afford to lose. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style.

You should be aware of all the risks associated with trading. You should seek advice from an independent financial advisor.

Any information posted on this web site is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All users of the website must determine for themselves what specific investments to make or not make and are urged to consult with their own independent financial advisors with respect to any investment decision. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. All opinions, analyses and information posted on the website are based on sources believed to be reliable and written in good faith, but should be independently verified, and no representation or warranty of any kind, express or implied, is made, including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, CastAwayTrader LLC and its officers and employees undertake no responsibility to notify such opinions, analyses or information or to keep such opinions, analyses or information current. Also be aware that the owners, officers and employees of the web site www.castawaytrader.com may have long or short positions in securities that may be discussed on the website, Premium Trading Chat room and/or in the videos posted by CastAway Trader LLC.

Past results are not indicative of future profits.

Subscribe to Free Updates

Get Unlimited Access