ES Daily Candle: Higher High, Higher Low, Higher Close: Yin-Yang Candle
Market Posture: Neutral-to-Negative and Probing Waves
Daily Swing Line: Neutral (set up for either higher or lower)
Daily Bias: Down (Settle Under 18-day SMA) for fourth day
Today we counted upward this exacting diagonal structure on the ES five-minute chart and posted it in real time. First, here's the chart as it was shown at 03:22 PM ET today.
|ES - 5 min - Diagonal|
We chose this count because any other would not respect the 0 - 2 trend line off the low. In other words, if you draw a line from 0 - b, it would cut off a third wave if you tried to call that the third wave. Also, in the futures - not in cash - there is an overlap with the down wave at 11:00 and what is labeled the a wave up. Then, in the after hours, price began to move lower after a near-equal retrace of the highs. But, it was enough to say that wave ((4)) can not be misplaced - because a downward wave would now be longer than wave ((2)) which is not allowed in a diagonal.
But, here's the problem: the very same wave structure can either be a leading diagonal or an ending diagonal! If it is an ending diagonal, then we proposed a plan for that in yesterday's comments. Let me provide a reminder.
|ES - 2 Hr - Declining Trend Line Broke Upward|
We said yesterday that for a wave ii location to be where it was shown, the dotted magenta trend line would have to hold. It did not. There's no "fudging it", no "only slightly over it". It just didn't hold plain and simple.
If there is a big gap down tonight (not saying there will be) and the low of alt: x is taken out, then we also posted that the downward structure could be a much larger diagonal which I sketched out in real time and you can find at this LINK.
But if the shorter-term diagonal is leading, then a number of upward counts is possible. Why such seeming indecision? It should be clear by now, it is not a problem with wave counting methodology. When a person can chart a wave to the 5-minute bar, then the method is pretty much spot on. No, as you can see from the chart, below, we are still doing battle at "the line in the sand", at the 18-day SMA, touching it again today. The Bollinger Bands are narrowing in. People are on vacation. We are in the middle of a price range. Pricing is both whippy and choppy.
|ES - Daily - Close Near 18-day SMA|
There is nothing sacred about a wave count when one recognizes the larger context. So, each day will be examined for what it is until there is some additional clarity.
Have a good start to your evening.