ES - what traders can see here
Let’s first look at this drop in a context of my primary bullish count.
As long as it stays over lows made a corrective wave ( iv ) down on June 3, 2019 this count stays alive.
Subwave c of wave ( b ) of ( v ) has to have an impulsive structure and is supposed to be strong and sharp.
However, this drop surely looks much stronger than it had to.
ES - 240 min updated at 8-10 AM on 8-6-2019
If we switch to a micro 15 min chart then an impulsive structure of this wave c of ( b ) down (from 240 min chart) will be looking like that.
So far this pre-market rally looks like a corrective wave iv up. Moreover, that bullish pullback may be structured as a-b-c and stretch to 2,876-2,896.
The vast majority of traders will be watching this rally as a dead cat bounce and will be looking to short this rally based on expectations of another drop lower in wave v down.
However, if that rally keeps stretching higher over 2,924 I would not be expecting continuation of immediate downside.
It only makes sense to fade this move up if we get first a move down in a micro wave b of iv and then another push higher in subwave c of iv (making a higher high over the top made by the first leg up pre-market). There is 30% chance that the panic selling overnight was the bottom and I would attempt to short only if I had a clean a-b-c up topping under 2,924.
ES - 15 min updated at 8-10 AM on 8-6-2019
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