ES - most likely has completed the -a-b-c down structure in an imperfect way
So far ES has been nicely following my favorite fractal of a corrective A-B-C down move:
Wave ( a ) down is subdivided into -a-b-c (three subwaves).
Wave ( b ) up is subdivided into -a-b-c (three subwaves)
Wave ( c ) down is subdivided into five waves down (five micro waves).
This is why we call that fractal “3-3-5”.
This is why it was quite easy for me to predict several big moves lately.
The main problem we have now is imperfect completion of the last five wave down move of wave ( c ) down.
Wave i down, wave ii up, wave iii down, wave iv up all look perfect.
Wave v down is supposed to have an a-b-c down structure where subwave c down is at leats equal to 76.4% of subwave a down.
This is what we did not get today.
Now we have two scenarios:
1. Bullish.
We assume that theory does not work in 100% cases and forgive ES for that imperfect comletion of wave v down. By the way, except for that short subwave c of wave v down everything else looked amazing:
– price hit the lower edge of the downward sloped channel,
– wave -c- down slightly overshot 138.2% ext of wave -a- down,
– wave v slightly overshot 176.4% ext of wave i up.
If we assume that we got wave -c- down bottomed today then we can get either five wave up rally targeting the previous all time high. And that means ES is going to make a new all time high.
Or, alternatively, if that -a-b-c- down is only wave ( a ) down of a bigger corrective (a)-(b)-(c) down structure with a very strong drop in wave ( c ) down in October 2021, then we should expect an a-b-c up bounce off the low made this morning.
I favor that bearish scenario. The Russell count has the same scenario. But before we get another strong leg down in wave ( c ) we should complete a large corrective -a- up, -b- down, -c- up structure of wave ( b ) up.
ES - 10 min chart updated at 9-20 PM on 9-13-2021
When we deal with a corrective -a-b-c- up structure the first leg up normally stalls at 33.3% -41.4% retracement of the preceding decline (in that case we measure the whole -a-b-c down structure that started at the all time high and bottomed this morning) = 4,470. ES has almost hit that target.
Then we face possibility of a corrective decline of wave -b- down overnight and tomorrow morning. Followed by a rally into OPEX Friday.
ES - 10 min chart updated at 9-20 PM on 9-13-2021
What is a low probability bearish scenario?
When price has unfinished job, as is the case today, because subwave c did not extend down even to the minimum target it tends to come back down and complete the unfinished business.
ES can still be in subwave b up of wave v down with another push down to come.
In conclusion, under the bullish scenario ES should produce an a-b-c down pullback making a higher low. Or, alternatively, under the bearish scenario, ES should produce an impulsive strong decline making a new lower low.
P.S. I remember we had completely the same case last year, we got a strong bounce off the imperfect low but then Nasdaq dropped down hard and made that lower low. I would prefer the bullish scenario because it is easier to trade. But can’t completely disregard that bearish alternative.
To solidly invalidate that bearish alt count bulls have to push ES over the Monday morning high made at 4,483.50.
Again, because of the OPEX week which tends to be bullish bears do not have more than next 24 hours to produce that decline.
ES - 10 min chart updated at 9-20 PM on 9-13-2021
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