Before I start I want to refer you to the macro update posted on the previous Sunday.
Back then I concluded that ES would make another push higher into a Red Target box.
Specifically I noted that:
“I would be focused on two extensions:
– c – of -v – = 123.6% of -a- of -v- = 2,903, and
– c – of -v – = 176.4% of -a- of -v- = 2,968.”
Last Thursday ES topped at 2,965.
I count the top made by ES mini at 3,386.25 on 21 Feb 2020 as the top of a major wave ( 3 ) up.
This i how we can align the current position of ES on a macro Five Wave up fractal that started at the lows of 2009:
After the major rally in wave ( 3 ) up top the market goes into corrective mode of wave ( 4 ) down.
The most common corrective structure played by wave ( 4 ) down is a flat structure:
When we attempt to nail a top of a corrective -A-B-C- structure we watch for:
( 1 ) Extensions of the first subwave -A- up.
In this case subwave -C- up topped at 116.4% ext of -A- up.
( 2 ) retracement ratios applied to preceding drop in wave ( A ) down.
In this case wave ( B ) up retraced almost 2/3 of the preceding drop in wave ( A ) down.
We also watch for ( 3 ) a complete internal micro structure of subwave -C- of wave ( B ) up (see on the chart below five waves (i), (ii), (iii), (iv) and (v) inside the wave -C- of ( B ) up.
We can conclude that most likely, wave ( B ) up topped at 2,965 last week.
We did nail the very top of wave ( B ) up last week and got the very first move down.
Well, we should get back to the Model of that flat corrective structure of wave ( 4 ) down (the second chart from the top) that has been unfolding since ES topped in wave ( 3 ) up in Feb 2020.
That model suggests that ES should decline in five micro waves.
That model idealizes the micro structure of the final wave ( C ) down.
I mean it represents a micro structure of the final wave ( C ) as perfect Five Wave down fractal.
However, as I mentioned above,
In corrective structures we should NOT expect perfect internal micro structure of subwave C
What I mean is that the wave ( i ) down may not have a perfect (a)-(b)-(c) subdivision.
It can come as a monowave we are dealing with now.
But either its ( a ) of ( i ) down or the whole ( i ) down we should reasonable expect a corrective wave ( b ) or ( ii ) up making a lower high.
When we get a corrective pullback we will be able to work with projections.
At this point all we have to do is to watch Demand Zones that could stop that very first decline.
When any Five Wave up fractal gets completed ( in this case that was subwave -C- of wave ( B ) up ), the first target for a corrective move down is the low made by wave -iv- down.
The micro wave -iv- down of -C- of ( B ) up bottomed at 2,717.25 on April 21st.
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