$ES: The Next Leg Down May Test 4,500

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I count that decline off the Dec’24 top as the wave A down that does not look having bottomed yet.

ES-mini Daily chart

The Sunday low can be counted as teh bottom of the micro wave ( iii ) down.

The quick 2 day pullback we got on Monday and Tuesday could be counted as the whole corrective wave ( iv ) up.

Two micro scenarios are probable:

It’s possible that that two day bounce was all of the wave (iv) up ( look at the right chart).

In that case ES can keep going down to the next target 4,495.

However, it is equally probable that such a huge drop should require more time for traders to get accustomed to new level before they get brave enough to push ES down to new lower lows (see the left chart).

In that case, the move up off the Sunday low was a subwave (a) up and this drop is a subwave (b) down:

In conclusion, it seems that a test of 4,500 level is coming sooner rather than later.

We can get a direct drop down there or one more dead cat bounce up to 5,252 in a subwave (c) of wave (iv) up. At this moment we do not have an attractive micro setup. Let’s see if we get one in the morning.

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