$ES #SPX #Elliott Wave #Macro
The Most Bearish Macro scenario is that we deal with a corrective wave X up:
Under that scenario this strong move up should fail in the red box and followed by another (a)-(b)-(c) move down under 4,000.
The Less Bearish Macro Scenario 2:
The less bearish macro scenario expects an A up, B down, C up consolidation off the Oct’23 low before another large leg down starts. That wave count would consider this rally as a subwave A up of that A up, B down, C up consolidation.
Interestingly here ES is testing a very important resistance of 21 EMA weekly = 4,419.
The low probability Bullish Macro Scenario 3:
I wish I could offer you a scenario where the rally off the Oct’22 low has been following an impulsive five wave up structure. But we can not count the July’23 high as the top of wave (iii) up because it failed to tag even the min required 138.2% extension of the wave ( i ) up.
Therefore if we had to count it as part of an impulsive fove wave up structure we would only be able to count the July 23 high as the top of the subwave (a) of wave ( iii ) up and the -a-b-c- decline that so far bottomed in Oct’23 as the subwav e(b) down of wave ( iii ) up.
That alternative bullish count implies that the next leg up should keep going up to 4,977 without much pullbacks that I have a problem to envision.
Now let’s inspect a micro structure of the Oct’23 rally:
We can attempt counting this move up as a five wave up structure:
Under the five wave up structure the subwave -a- of wave -v- up normally makes a double top retesting the previous high made by wave -iii- up. Under that wave count bulls should not be able to break over 4,421 (41.4% retracement of the July – Oct (a)-(b)-(c) decline.
We should get another a-b-c down structure setting up the stage for another rally in the final subwave -c- of wave -v- up targeting the 50% retracement = 4,459.
There are two potential micro paths for the expected micro -b-c down consolidation:
A bullish micro path 1.1. (the standard pattern).
Note that if ES goes down and tests the green demand zone it would complete the right shoulder of the bullish Inverse Head and shoulders pattern. That would be a great long setup to ride a rally from 4,400-4,390 up to 4,459!
A bullish micro path 1.2. (a tricky pattern).
Over the previous 6-12 months I did not see the standard pattern but I learned a more sophisticated pattern where the subwave -b- down was shaped as the running flat structure:
This upcoming corrective subwave -b- down can be shaped as the Running Flat structure:
Under the tricky 1.2 micro setup we can get a corrective subwave -b- down shaped as an a-b-c down whipsaw making higher high and a higher low.
Now I will try to explain how that rally is aligned with the Primary Macro Bearish scenario shown above.
Under the Primary Bearish Macro Scenario 2 the (a)-(b)-(c) move down off the July’23 top should be followed by another (a)-(b)-(c) structure that should make a lower high retracing from 50% to 66.7% of the July – Oct decline.