Wednesday, June 17, 2020

Flexibility Required - I'll try to show Why

The market - as measured by the ES futures - started the day flip-flopping around the zero line in what seemed like meaningless movement until a couple of patterns caught my eye.  Looking at the ES 30-minute chart, below, the first thing to notice is that the high on June 17th is within 90% of high on June 16th.

ES Futures - 30 Min - 90% Retrace Wave

So, if the wave count down to noon yesterday is only three-waves, and the wave count up to today's high is only three-waves, then that means price could be making a flat wave. (You certainly would not be out of line to also consider a triangle. I have, at times.)

The other item that caught my eye was the expanding shape downward from today's high. Here it is in the chart below.

ES Futures - 30 Min - Expanding Shape Downwards

That being the case, live & in real time, I decided to test the hypothesis that we might be making a lower wave after the mid-morning to mid-afternoon rally. I showed readers of this blog in real-time, and as fast as I could post it, this potential contracting diagonal c wave, which ended the afternoon rally. You can view the chart as this LINK.

I stated that if we had, in fact, made an ending diagonal wave c wave, then the start of the diagonal should be taken out in less time than the diagonal took to form. And, with interim charts, that wave was tracked lower - see the comments from the prior post if interested - and, in fact, both the start of the smaller c wave diagonal and the prior low were exceeded lower. So, at this point, the evidence suggests there could be the larger expanding diagonal lower - which is still forming.

And things could get bumpy here. It we do make only a true flat wave, then it could be a second wave of a move higher. The purpose of the flat would be to burn time while moving prices a bit lower to more deeply retrace the up waves from Sunday/Monday.

Yes, the alternate of a flat is that the 90% wave is the end of a move upward. It would have ended in a truncation. That is certainly possible, and will be watched for. But, at the present time, if the move down turns into a valid expanding diagonal, then we know it could either be an ending diagonal or a leading one.

This is how the market creates uncertainty. As a result, it is not a time for opinions. It is not a time for worry about the FED. It is a time to track things carefully and cautiously, until the lengths of the waves becomes more telling.

Have a very good start to your evening.
TraderJoe

10 comments:

  1. There appears to have been a triangle in the middle of today's action right before TJ's diagonal. https://imgur.com/cHVvzKu

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    1. ..well, something like that.. the triangle is the reason for a potential down count, ending at today's lower high in a truncation. But not quite as it's being counted in the link.

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    2. Right. What I have labeled (c) is an impulse, not a diagonal.

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  2. This is looking like a great call.

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  3. Hi TJ,
    Would it be possible to update the medium term count.
    Still looks like we are in wave C up and currently dealing with a sideways/flat ii or 2 of that C. Eventually if it goes down beyond a certain point (>100% of 1) then that scenario would be to be invalidated/re-evaluated right? Thanks!

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    1. ..flat ((ii)) minute-ii and >100% of ((i)) .. minute-i; otherwise you did a good enough job yourself.

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    2. Thanks! Just keeping an eye on the forest while learning about the trees!

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  4. Can't confirm anything yet, but, given the halting nature of both today's advances and declines, it is possible that if we are still in the larger diagonal, lower, then this 'might' be the a-b- segment with b as a triangle.

    https://invst.ly/r6dji

    TJ

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    Replies
    1. If the triangle does work out in the chart above, could this abc still be part of the larger B on the daily in some way? Im trying to see how this fits in.
      Thanks!

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  5. A new post is started for the next day.

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