$ES #ES-mini #trading setup
In my previous updates (here and here) I made a bullish case for a rally that should hit 5,040-5,050 target. That target was hit on Friday.
Let’s review two bullish macro scenarios.
(1) The Very Bullish scenario:
ES has broken out of the upward channel. That makes the less bullish low probability Ending Diagonal scenario even less likely path. The closest strong resistance on a daily chart is 5,180 – 5,195.
Note, ES-mini is in the strongest part of the rally in a subwave (c) of wave ( iii ) up.
The most deadly sin of a trader is to short a rally in a subwave ( c ) of wave ( iii ) up because that specific way exteeeends higher than you expected in 85-90% of cases.
Let’s zoom-in to a 240 min chart:
If bears fail to break under 5,000 then we can get two more extensions, first to 5,105 – 5,125. and then, after a pullback in a wave -iv- down back to 5,040 – 5,020, another leg up to 5,195-5,215:
(2) The Less Bullish scenario:
On Friday ES hit a 176.4% ext of a micro wave ( i ) up, the first wave up off the Oct’ 2023 low:
The 176.4% extension is the normal target for the wave ( iii ) up in the “normal” (not extended) five wave up structure. I can make a case based on a micro count that wave ( iii ) did top:
To make a confident topping call at the 176.4% extension of wave ( i) up one needs to check if the second part of the wave ( iii ) up, in a subwave (c) up, stretched to 138.2% ext of the preceding leg up, a subwave (a) of wave ( iii ) up. In our case that 138.2% ext of the subwave ( a ) of wave ( iii ) up is located at 5,195.
The next most probable target for the subwave (c) of wave ( iii ) up is a 123.6% extension of the subwave (a) of wave ( iii ) up. In our case that 123.6% ext is located at 5,087.50.
In 15%-20% of cases the subwave (c) of wave ( iii ) up may top prematurely under those typical extensions. But in those cases we would normally get a subwave (b) up of a wave (iv) down that would make a higher high somehow compensating for the relative weakness of the subwave (c) of wave ( iii ) up.
So, in conclusion, there is only 20-25% probability that wave ( iii ) up has topped. We need bears to push ES under 5,003 to give us the first confirmation that it did make some kind of a top.
In conclusion, bears will have to push ES-mini back under 5,000 on Monday – Tuesday to confirm the less bullish scenario and start of a corrective wave ( iv) down.
If bears fail to break under 5,000 then we can get two more extensions, first to 5,105 – 5,125. and then, after a pullback in a wave -iv- down back to 5,040 – 5,020, another leg up to 5,195-5,215.