$ES #ES #trading setup #Elliott Wave
This is how the primary bullish wave count looks like:
The Primary bullish wave count considers the rally off the last major low made in oct 2022 as an unfolding incomplete five wave up impulsive structure. That wave count considers the July 24 high as the top of the wave (iii) up, the largest and strongest part of a rally. The late July – early Aug decline can be considered as a corrective wave (iv) down. The drop hit the textbook textbook target for the wave (iv) down which is a 41.4% retracement of the preceding rally in a wave (iii) up.
Let’s zoom in to see a micro structure of this move up:
Bulls can count this move up as an impulsive rally. This current move up should be counted as a subwave -a- of wave -iii- up that is approaching a resistance 5,411. Another resistance is 5,434, a projection from the bullish inverse head and shoulders pattern / setup completed last week.
Under the bullish scenario this slow grinding move up is a late stage of the subwave -a- of wave -iii-up and should be followed by a flat a-b-c down consolidation preferrably over 5,319:
We should remember that bears are still convinced this three wave move up is just a temporary pullback in a wave -iv- up to be followed by a decline in a wave -v- down targeting new lower lows:
When we get an a-b-c move up off a potetial low aggressive bulls call teh bottom and go long. At the same time bears consider that a-b-c move a just a temporary bounce to be followed by another drop.
The conflicting sentiment of two camps is what creates uncertainty here.
The main trading law is big moves come from failed moves. We need to wait until one party, either bulls of bears fail at an important level of supply / resistance.
Let’s talk about important price levels.
I use my Cycle Trader indicator to identify important price levels.
In the bull market price spends 80-85% of the time OVER broken resistance and treats the broken resistance as a support. Therefore, in a bull market the broken resistance should be considered a support. So if bears break under 5,361 that would be failure of bears that would attract short sellers.
The Daily pivot is another important price level:
As I noted above, under the bullish scenario this slow grinding move up is a late stage of the subwave -a- of wave -iii-up and should be followed by a flat a-b-c down consolidation preferably over 5,319.
If bears fail to break under 5,319 and we get an a-b-c shaped consolidation that would be a fantastic long setup for an accelerated part of a rally in a subwave -c- of wave -iii- up targeting 5,700.
Break back under 5,319 would convince bears a corrective bounce in the wave -iv- up topped and a new leg down in a wave -v- down targeting new lower lows started (see this bearish scenario).