$ES #ES-mini #trading setup #ElliottWave
In July we got a large -a-b-c- move down where -c- bottomed at a 100% ext of -a- down:
On a micro level we correctly identified the Green Demand zone. It worked out well and produced a large a-b-c up pullback:
Read my explanation about the way how I identified that Demand Zone.
The rule is Any a-b-c u structure that stays under a 50% retracement of the preceding impulsive looking decline (5,531.50) should be considered corrective and should be expected to get followed by another impulsive move down.
So bears believe that a-b-c up consolidation will be followed by another leg down to a lower low.
To invalidate that potential bulls need to push ES over 5,534.50, the pre-market high:
let’s come back to the 120 min chart:
If bulls push ES over 5,534 that would most likely mean that the July -a-b-c move down was all of the subwave (a) of wave (iv). In that case, the Thu – Fri whipsaw was a start of a corrective wave (b) up. A large corrective wave (b) up should be structured as -a-b-c- and should be able to stretch higher up to the Red Box.. If bulls fail to push the second leg up in a subwave -c- of wave (b) up over 5,652 (the upper edge of the Red Box) that would be a short setup to ride the second leg down in a subwave (c) of wave (iv) down.
Two steps ahead consideration:
Note that we got a clean -a-b-c move down. Under the Very Bullish scenario that a-b-c- move down can be all of a corrective wave (iv) down even though it looks a shallow one in comparison to the preceding rally in the wave (iii) up. To trigger that very bullish scenario at the very least bulls need to push ES back over 5,652 (the upper edge of the Red Box).
As long as bears hold ES-mini under 5,534 the bearish setup should be the primary one the table. That bearish scenario argues for one more push lower in a micro wave v of -c- targeting 5,400 – 5,380.