$ES: Negative Divergence

ES #ES-mini #tradig setup #Elliottt Wave

ES-mini keeps climbing extending in the micro wave -iii- up:

I continue to expect a larger -a-b-c- down consolidation in a wave -iv- down to be followed by another rally in a wave -v- up of (a) of (v). You can see signs of deceleration with your naked eye.

Just compare slopes of two blue trend lines. the slope of the latest one (the lower one) is much less steeper. That spells “negative divergence”. You do not need to apply RSI or MACD indicators to clearly see that negative divergence. Negative Divergence means decelerating momentum.

That is a good example why a trader shall never short a rally in a wave 3 of any degree. There are two main reasons for that:

(i) waves 3 tend to extend past the normal targets, and

(ii) wave 4 can come as a shallow consolidation not deep enough to cover shorts.

Bulls need a proper a-b-c down pullback in the wave -iv- down building a base, a foundation for another push higher in the wave -v- up.

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$ES: A Bear Trap Followed by A Bull Trap

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