ES - Bearish scenario becomes my primary after breakdown on Monday
In my Weekend Update I explained that the previous low made at at 3,431.50 on 10-15-2020 was a critical support.
ES - Daily "Bearish" chart updated at 10-00 PM on 10-19-2020
This move down off the top made at 3,541 on Oct 12th can be considered as a micro wave ( i ) down out of the five micro waves of wave -C- down. I would like to get a clean (a)-(b)-(c) up pullback of wave ( ii ) up before another stronger leg down in wave ( iii ) down starts. On the chart below you can see that subwave ( c ) up may stretch to the Red target box. This is from where another leg down in wave ( iii ) down may start.
ES - 30 min "bearish" chart updated at 10-00 PM on 10-19-2020
Now let’s talk whether bulls have any chance for pushing ES higher one more time.
As long as ES holds over 3,400 bulls have some chance to turn that decline into a corrective wave -iv- down with one more rally in wave -v- up to come. We would still count the (a)-(b)-(c) move up off the low made on Sep 24th as a large corrective wave -B- up to be followed by a large decline in wave -C- down.
But the Bullish micro count can give bulls little bit more time before start of a large decline in wave -C- down.
Why 3,400 level is crucial for the bullish count?
For any wave 4 down 66.7% retracement of the preceding rally in wave 3 up is the point of no return. If that level is breached tomorrow that does not mean that ES would tank right away. That violation would invalidate the last chance of bulls to make one more high. After that violation ES would most likely bounce back over that important level at 3,400. But that would be a corrective pullback to be followed by another stronger decline.
ES - 30 min "bullish" chart updated at 10-00 PM on 10-19-2020
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