Since 23 Aug, the ES E-mini futures have made higher highs and lower lows at locations where cash has not. This is one of the reasons why we cited in earlier posts that a "truncation top" may have occurred. It did.
Below is a 4-hr chart of the ES E-mini S&P futures, because of the choppiness, and using this chart, we have looked for every possible leading diagonal or triangle that now makes sense, and none of them do. We can only find a valid ending diagonal triangle in one location. See below.
That being the case, we label the chart in this manner.
|4-Hr ES E-mini S&P Futures|
This again makes prediction difficult, so looking to Fibonacci levels, and / or prior support may help give some clues later on. We just want to be very "up front" - when we don't know, we simply don't know, and it is another reason why risk in the market has just increased dramatically.
The down wave is strongly out of a base channel from 1 to 2, or a to b, and the EWO is at a low with no divergence, so an impulse for a larger A wave can form if it likes to eventually make a deeper correction or the 'c' wave can continue on to end the correction lower. This is a clear example of why the three-day upwardly contracting will be difficult to predict in its entirety.
The only suggestion I have at this point is to watch the discrepancies between the futures and cash, and make sure that the counts can work on both. The counts on the above chart do work on both!