ES - this rally off the low looks corrective
I am switching to 2 min micro chart to check a micro count of the rally that started after exhaustive drop to new lows this morning. On the chart I can see that wave ( iv ) up may top tomorrow morning
May be it’s the first subwave ( a ) of ( iv ) but it has a clearly corrective structure, and it is about to top into 44.1%-50% retracement of wave ( iii ) down.
The main observation one could make from this chart is that the move off the low has a clearly corrective structure.
What that means is that it is a temporary pullback and the move down has not got completed yet.
ES - 2 min chart updated at 9-45 PM on 10-3-2019
Now the most important question if that move up is all of wave iv up or only its first leg up, subwave a of wave iv up
If we zoom-out to 45 min chart you can see that this move up lack a textbook a-b-c structure and that is why I think it looks like a of iv.
But in terms of trading we have the very same implications for trading from both scenarios.
1. It does not make sense to hold longs anymore.
2. It makes sense to look for starting a tactical short.
Whether we are going to get b down or stronger drop in wave v down the key word in both scenarios is “down”.
That does not mean you need to short it right away.
I will be looking for one more higher high as it is shown on 2 min chart posted above.
ES - 45 min chart updated at 10-05 PM on 10-3-2019
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