$ES: A Pullback is Coming: Macro Weekend Update

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$ES #ES-mini #weekend

Please note that I have switched to ESH24 , the March 24 contract of ES-mini futures:

ESH24, Daily chart, the bullish macro scenario

This is the scenario bulls are watching.

They believe that Jan 22 top was the wave 3 up, and the Oct’22 low was the bottom of a corrective wave 4 down. That wave count argues that the market can go a way higher to a new all time high in the final wave 5 up. Under that scenario the very minimum long term target for the top is 5,540.

But even under that scenario price is not where it can keep pushing higher much higher.

A pullback is overdue.

As you can see on the chart, I count the Nov’23 rally as a micro wave i up to be followed by a shallow flat consolidation in a micro wave ii down.

Let’s zoom-in:

ESH24, Daily

ESH24 should be in the final innings of the wave -i-up. That means a corrective pullback in the wave -ii- down is coming.

The wave -i- up can stretch to 4,740 (March 24 contract) to re-test the July 2023 high, make a double top and roll over.

Let’s look at a 30 min chart:

ES-mini 30 min chart

That micro count suggests that ES-mini may make a minor top on Sunday – Monday and start a corrective -a-b-c- down pullback.

(2) The Alternative Bearish scenario.

Bears still have an opportunity to start an impulsive or trending move down in a subwave (c) of wave (C) down:

ESH24, Daily chart, the bearish scenario

That bearish wave count / scenario assumes ES has been in a lengthy consolidation of a corrective wave (4) down shaped as a triangle.

Under that count ES-mini should continue to trade in a range bouncing in between of two converging trend lines during 2024.

The main distinction between those two scenarios is strength of the upcoming move down.

Under the bearish scenario we shoud get a much stronger five wave down structure that would push ES back down to 4,000.

Under the bullish scenario we should expect a shallow theree wave (a-b-c) down move that will most likely find a strong support at 4,500.

Btreak under 4,450 would be a very strong argument in favor of teh bearish scenario.

Note that SMA 50 on a daily chart of ES-mini is located at 4,464.

So the bullish case is based on assumption that bears will not be able to break that 50 SMA.

In addition, the EMA 21 weekly is located at 4,497 = very strong support for the bullish scenario.

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