$ES #ES #trading setup #Elliott Wave
The Primary Bearish scenario allows bulls to make one more push lower to produce a clean (a)-(b)-(c) up corrective structure off the early October low.
This is how that scenario looked like as of last Sunday:
This is how that scenario looks now:
Let’s zoom in to a 120 min chart and see how that bearish path may play out:
On this chart we can see three potentail attractive trading setups.
Here we move from theory to practice. We say, let’s imagine the future takes this path. How we gonna make money on that bearish path?
Potential setup 1 (short).
If we get a bounce up to 4,380 and then rally stalls at that level, that would be a great short.
Potential setup 2 (long).
If we get an -a-b-c- down move to tag the Green Box and bull stop it at or over 4,280 that would be a very attractive long setup to ride the second leg up in a wave C up targeting the Red Box.
Potential setup 3 (short).
If price make a five wave up rally that stops at or in the red box we can go short to ride a very strong decline in a wave 3 down targeting 4,050 wit potential extension to 3,800 (to retest the Oct’22 low).
Let’s now come back to the Bullish Macro Scenario now.
First I will show you a chart of S&P cash index (SPX):
Below you can see how that same scenario looks like on ES-mini Daily chart:
Frankly, I am skeptical about that wave count because wave (iii) up failed to tag the min required 138.2% ext of the wave ( i) up. However, bulls can argue that the July top was only a subwave (a) of wave ( iii ) up and the a-b-c pullback that followed was a subwave (b) down. That could be considered an alternative Very Bullish count that allows bulls to start a very strong rally in a subwave (c) of wave ( iii ) up targeting to re-test the all time high made in Jan’2022.
That Very Bullish scenario looks like that:
The -a-b-c move down off the July high can easily be counted as a corrective pullback.
That corrective pullback allows bulls to start a new stronger leg up.
We can dive in even deeper and outline how that bullish scenario can make the next move based on a micro tick bar chart:
Bullish Micro scenario (i):
We can count the move up off the Oct low as a five wave up rally and count it as a subwave -a- up.
That rally should be followed by a three wave a-b-c down move or a complex w-x-y decline.
In case its a simple a-b-c down the wave -b- down may bottom at 4,332 at 100% ext of the wave a down.
Bullish Micro scenario (ii):
We can count the October decline as a complex w-x-y structure:
the decline may extend lower down to 4,300.
No doubt, if we get such an emotional drop to 4,300 that would be much better long entry because it would test much stronger support, the low made by the subwave b down. That drop would provide bulls with a setup to test a 50% retracement of the preceding decline = 4,460. But it will be able to extend all the way up to 4,575 (see the location of -c- of -i- up on that Daily chart posted above.
So, under the Bullish scenario we can conclude that:
(i) bulls can start a nice push higher after bears test and fail either at 4,332 or 4,300.
(ii) break over 4,376.50 would confirm start of a new rally.
Now I want to remind you that when we discussed the Macro Bearish scenario above I outlined the first short setup: “if we get a bounce up to 4,380 and then rally stalls at that level, that would be a great short.”
This is a perfect case that shows that even when you have several conflicting scenarios you can find trading setups when two very different scenarios allow bulls or bears to make a move in one direction. This is when its a good time to bet your money for a move that is supported by two most probable scenarios.
If bulls manage to break over 4,380 the bullish scenario will become our favorite one.
However, failure of bulls at 4,380 would be a strong bearish signal and invitation to go short.