$ES #ES $NQ #NQ #trading setup #Elliott Wave
The Thursday morning rally stopped where two previous swings stopped. And that is good news. This is how a subwave -a- of wave -v- normally behaves. If bears manage to push ES under the afternoon low made at 5,598 I will have to question that bullish scenario.
lack an a-b-c subdivision behind the afternoon drop yesterday makes me consider two path for higher highs:
On the right chart you can see why I consider possibility for another decline for today. That decline would complete the textbook three wave micro structure of the subwave -b- down
Its critically important for bulls to stop that possible second leg down over 5,575.
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`We can consider a move down as a subwave -b- as long as bulls hold ES over the previously made low 5,561.
As long as we consider the Thursday afternoon drop as all of subwave -b- down (the left chart) or part of the subwav e-b- down (the right chart) we can expect another leg up in a subwave -c- up that should tag the Red Box.
You can read my article to understand why an a-b-c micro structure is a hallmark of a corrective wave.
On the left chart shown above you can see the direct path higher.
Bulls need to push Es over the Daily Resistance 5,644 to kick into a trending mode and confirm the bullish scenario.
Let’s look at NQ-mini:
NQ broke out of the downward sloped price channel and the Thursday afternoon drop can be considered as successful retest of the broken resistance from above. Now bulls need to push NQ over that 19,700 resistance to start an accelerated rally.
Wave wise my main concern is that the afternoon drop lacked a clean three wave structure, a hallmark of any corrective pullback. Therefore, there is possibility for another push down in a subwave c down. Such a decline would complete a clean a-b-c down structure. In case bears push NQ down one more time it will be of paramount importance for bulls to catch that drop over the previously made low 19,140. To invalidate that bearish possibility, bulls need to push NQ over the resistance 19,700.