$ES: Will Bulls Get a Pullback Before It Takes Off?

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$ES #ES-mini #Elliott Wave #trading setup

Yesterday I noted that bears may lose another battle if they allow bulls to reclaim the 5,895 resistance:

If they fail and price comes back up over 5,895 that would be a decent confirmation that the wave (b) of ( iii ) down bottomed on Fri morning and we should NOT expect another leg down in a subwave -c- of (b) of ( iii ).

ES-mini 30 min chart

Bulls managed to reclaim the 5,895 level right after 10-00 AM EST and by dong that they triggered a short covering rally.

It is possible to count the a-b-c move up off the Fri morning low as a micro wave i up.

That wave i up may top in the yellow box.

The ideal scenario for bullishly inclined traders would be an a-b-c down pullback off the yellow box in a micro wave ii down.

If price spikes into the yellow box and then retreats back down to 5,900 we will get a bullish Inverse Head and Shoulders pattern with the neckline at 5,977.50 (the red horizontal line).

Let’s discuss what bears hope for.

In July 2012 a similar rally stopped at 85.4% retracement making a lower high:

ES-mini Daily chart, 2010 – 2012

5,893 is the broken Daily Resistance. That is the key support for today.

In that current case 5,959 is a meaningful 85.4% retracement. This is where bulls have to prove their strength. Bears will try to stop the rally at the 85.4% retracement.

To cast doubts over the bullish scenarios bears need to stop this rally under 5,960 and then push ES down under 5,837.25.

In contrast, if bulls manage to break over 5,960 that would open the door for the Very Bullish path:

ES-mini 120 min chart

DAY CLOSING NOTES posted at 4-03 PM EST

we have got a clean a-b-c move down re-testing the breakout level 5,895:

ES-min 30 min chart

Here bulls got a micro long setup to start another strong rally.

Its important for bulls to stop the decline here. Its possible that bears push ES lower and deeper into the Green Box during the overnight session. That would make the long setup even easier to execute. In case ES drops under 5,895 we will have to wait until bulls manage to reclaim that level. That would be a great long setup.

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