$ES #ES-mini #Trading setup #Elliott Wave
This morning ES kissed the textbook target for a wave (iv) down, a 41.4% retracement of the wave (iii) up. That fib is located at 5,136.
If we zoom-in to a 5 min chart we can see a textbook bullish Inverse Head and Shoulders pattern that kicked in around 4-00 PM EST and triggered the evening rally.
This afternoon at 3-39 PM EST I shared this long setup with subscribers of my Premium Chat room:
This is what I wrote: “Here we got an attractive long setup, the textbook Inverse Head and Shoulders pattern. Safe entry would b to go long on a break over the neckline 5,278. An aggressive entry is to buy here with a tight stop under 5,197.”
An aggressive long entry would make 80+ point quick gain.
Let’s consider several scenarios and discuss ways how we can trade each of them.
So as long as Bulls hold ES over the broken neckline 5,280 bulls will remain in control. The basic projection of the Head height points to a potential target at 5,434. The bearish Plan B can be triggered by a break under 5,192.
What could be a trigger for another leg up under the bullish Plan A?
The Bullish scenario A1: A failed attempt to break under the neckline 5,280:
That scenario is based on the assumption that the corrective a-b-c- down structure of the wave -b- down is shaped as the bullish Running Flat structure.
The Bullish scenario A2 (tricky): ES is an extremely tricky and hostile instrument to trade because it loves to play dirty. Specifically it can follow a very difficult to trade the Expanded Flat structure (see below):
ES could drop down to 5,185 in a scary quick drop under the breakdown level 5,192 only to tur back up and reclaim that 5,192 support there after. That failed break under protective stop would then trigger a very strong short covering rally and propel price to the target 5,434.