ES and NQ may both be counted as triangles
Good morning, folks! I have good news and bad news for you!
The bad news is summer is over.
The good news is I am getting back to my regular schedule with morning updates starting 8.30 AM EST and the final update around 10.30 PM EST.
No more flights and changes of time zone for the next several months.
Now let me show you how I can use the triangle count I have been applying to NQ 240 min chart to ES 240 min chart.
NQ remains to trade in a range constructed by two converging trendlines (see the chart below).
That template may be counted as a triangle.
The only thing I do not like about that triangle is a very complex magenta subwave b down that looks more complex than preceding magenta subwave a up. Alternatively, NQ has to drop under the low made by wave b down at 7,353 on 8-25-2019 to invalidate that count
Until we get the final fifth subwave e up completing that red wave ( b ) up shaped as a triangle I will not attempt trading it.
As long as NQ stays within that triangle I will not attempt trading it because every move inside that triangle should get shorter than the previous one.
Either NQ should break under the previous low and invalidate that structure or complete the final fifth subwave e up and that larger wave ( b ) up shaped as a triangle.
The full completion of the wave ( b ) up would be a good short. Because I remain to be sceptical about validity of that triangle we should also be prepared that this triangle may transform to a simple a-b-c up with another push higher over the upper declining trendline to complete wave ( b ) down. As you can see in any of possible scenarios I expect start of another leg down in wave ( c ) of B down. The only question is how long indices may hang out in a flat consolidation to let TVIX complete its corrective structure before another rally.
NQ - 240 min chart updated at 8-30 AM on 9-3-2019
This is the very same alternative triangle count as NQ has.
What is important to note that this a-b-c move down in wave ( d ) has to hold well over the previous low made by wave ( b ) down (the black label) at 2,810.25 on 8-25-2019
Then we will be left with another final smallest push higher in subwave ( e ) up that would complete that large wave ( b ) of B (see the blue labels) structured as a triangle
And, again, unfolding triangle structure means that every subsequent move should get shorter, trading volume should dry up and participation of traders should keep decreasing until completion of this pattern at the top of subwave ( e ) up.
The subsequent breakdown will come as a strong move with increased trading volume
Here I should note again that I can not consider this count as my primary because the black subwave ( b ) down looks too complex to me. That does not violate the count but wave ( b ) looks excessively complex comparing to preceding subwave ( a ) up. Again the very same idea applies to ES. We should either get a completion of that triangle where we will see continuation of whipsaw trading withing narrowing range. Or we will see some breakdown that would invalidate that count. Or we will see some push higher transforming the triangle into a-b-c structure. In all those case we should expect another push lower in the blue wave ( c ) of B down. Now we just need to get a good trading setup to enter a short trade.
ES - 240 min chart updated at 8-35 AM on 9-3-2019
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