ES and NQ dropped under the morning low and damaged their bullish counts
Both ES and NQ dropped under the low made in the morning. My bullish count did not expect that.
With regards to NQ I still can argue that it is wave iv down before another push higher in wave v up.
Note that at this time it retraced 50% of preceding rally in wave iii up.
That is a pretty common retracement ratio for wave iv down.
What level is the critical support for that wave iv down?
It can retrace even 61.8% of wave iii ( 9,029).
But if it goes deeper that would invalidate that count.
NQ - 15 min chart updated at 10-30 PM on 1-29-2020
Unfortunately, the drop in ES was much deeper than in NQ.
I can not apply the same bullish count to ES because it dropped under 66.7% retracement of wave iii up.
It’s simply too deep for wave iv down. That means the micro bullish count ES followed nicely for two days got invalidated.
At this point we may expect ES to re-test the low made on Monday.
ES - 30 min chart updated at 10-30 PM on 1-29-2020
When stock moves in an unexpected way we should immediately zoom-out to check a bigger picture.
I based the bullish count on assumption that a deep -a-b-c- down pullback was a minor wave -iv-down.
If price violates lows made on Monday morning (for NQ 8,925 and for ES 3,233) that would mean wave ( iii ) up has topped and we are dealing with a bigger wave ( iv ) down.
What is really important is that even if we deal with a bigger wave ( iv ) down it does not mean price will collapse right away. That bearish scenario would consider drop into Monday low as subwave ( a ) of ( iv ) (the first leg of the corrective decline ) and move up that topped on Wednesday morning as all or part of subwave ( b ) up of ( iv ) down. Even if that is ( b ) up it does not look completed. The move into Wed morning high could be -a- up followed by overnight decline in -b- down leaving us with potential for another move up in -c- of ( b ) up.
In conclusion, ES most likely invalidated a clean bullish scenario and opened a door to many different alternative scenarios. We need to wait for additional clues that would help us to pick one most probable scenario to trade.
ES - 240 min chart updated at 10-30 PM on 1-29-2020
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