ES - may be inside a corrective wave ( b ) down and that explains that wild behavior
Let’s stick to a good habit to always start a new day from a long term chart, either a daily, or 240 or 120 min.
In my personal experience in Wave Analysis the most crucial element of success in predicting short term moves is the right reading on a long term pattern.
I call it a “directional bias”. So lets first have a look at 4 hour chart below.
We have got a complete rally off Jun’03 low. On a micro level it can be counted as completed. I count that rally as wave ( a ) of ( v ) of A of 5 ( continuation of the the large rally started in Dec’18).
Then we may expect a corrective wave ( b ) down.
That wave ( b ) down would be normally subdivided into a down – b up – c down.
We may expect that:
1. The first leg down in wave a of ( b ) down may be shallow and have an ugly three-subwave structure.
2. The second leg in wave b up of ( b ) down may be strong because it points in direction of the main trend which is UP. It can make all the way up to the recent highs of even make a new higher high.
3. The conclusion of the correction of wave ( b ) down comes with the final third leg in subwave c of ( b ) down. That should have an impulsive structure and may be much bigger than that first “lazy” and slow decline in wave a of ( b ) down.
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Now let’s scroll down and switch to 30 min chart.
ES-240 min chart updated at 9.15 AM on 6-26-2019
It looks like we are dealing here with that first “lazy” and slow move down in wave a of ( b ).
We do not know whether that wave a down subdivided into three micro waves (red labels) has bottomed. It can make another push lower.
Then we should expect the second leg of this wave ( b ) down. The second leg is a corrective wave b up of ( b ) down that may come as a strong rally targeting recent highs. We may be dealing with a start of this corrective “dead cat bounce”
Because we are inside a corrective wave ( b ) or even worse, wave b up of ( b ) down, you should trade with caution. That is the least predictable wave and normally moves quite erratic.
ES - 30 min chart updated at 9.15 AM on 6-26-2019
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