As far as the rules for Elliott Wave apply for counting a contracting diagonal, this morning's price movement downward has passed the point of no return for a contracting diagonal. As you can see from the ES 4-hr chart, below, the downward wave is longer-in-price than wave ii, and that means that any longer or further extension of the diagonal is not allowed as it would break the rules. This measurement works in both cash and futures.
Such a diagonal is valid in every aspect. We said yesterday it could be completed; we were just waiting for the breakdown or further break-out upwards. The breakdown is plainly what occurred. While other chart services were egging you on with projections of 3,900 - or even the round number 4,000 - we ignored the noise and just kept counting; quietly, unemotionally and with flexibility. So, if we were going to those numbers, it wasn't without going down past 3,800 first.
As with all contracting diagonals, there is no guarantee that this one is not a leading diagonal. But, from a probability perspective that prospect seems extremely unlikely given that we are at an all-time market high - as of yesterday.
As of this writing, price is in a retrace stage with five smaller degree waves up. The next steps in downward confirmation are 1) trading below the low of wave ii, and 2) trading below the start of the pattern.
If, and ONLY if, full confirmation of the diagonal is obtained, then the typical targets for a Flat wave are as follows.
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| ES Futures - 1 Day - Flat Targets |
Best wishes to all.
TraderJoe
Thanks TJ:
ReplyDeleteThe re-test may take the broken trendline as today's options expiration has more puts open than calls, up to 384
👍 thanks for update. Don’t forget everyone that new money is coming and the front running by MM. I sold my short after the open. I’m a chicken on shorts, lol.
ReplyDeleteTJ - are you anticipating a 50 - 62% pullback of March lows in a X wave? Thanks
ReplyDelete..see below, and above.
DeleteThe typical targets for a Flat wave were added as a chart to this post, IF and ONLY if the start of the diagonal is exceeded, lower.
ReplyDeleteTJ
👍 the start of diagonal is from Jan. 1 ? Thanks for targets.
Delete..yes.
Deleteflat wave correction will be ((1)) for Minor C?
DeleteGold has a nice channel since 2090. I would say were are in b of Y in this correction.
ReplyDeleteTJ
ReplyDeleteThanks for everything. Only thing contra to our forecast is the Advance decline volume on Nyse and Nasdaq(both are up). Can you please take a look.
Stocks above their 50ma has nosed below 50 level. :o)
ReplyDeleteStocks above their 50ma (follow up) -
Deletehttps://funkyimg.com/i/3an99.png
Reminder of the FED meeting output at the top of the hour.
ReplyDeleteTJ
It sure looks like 5 waves down off the high?
DeleteES 4-hr; wave ii has been exceeded lower - the next step in confirmation has been obtained.
ReplyDeleteSPX daily just hit the big trend line. March 23, Oct 30, Jan 27. Absolutely fascinating, thank you for your ongoing coverage TJ.
ReplyDeletedo the dates coincide with Powell talking? would be curious to know..
Deletethanks TJ
ReplyDeletewelcome!
DeleteWow Vix broke out, volume on uvxy is up.
ReplyDeleteYea the VIX shorts got killed today. Exceeded the 33 level I thought it could get to. 41 - 44 looks possible. Stocks above 20 ema. Already down to 26%.
ReplyDeleteUpdate on daily -
ReplyDeletehttps://funkyimg.com/i/3antU.png
Morning look 4hr -
ReplyDeletehttps://funkyimg.com/i/3aoeK.png
👍 thanks
DeleteI think its trying to hold uptrend line ET had on the 01/16 post.
ReplyDeleteWith all the chaos, interesting to note Gamestop seem to follow the eight fold path.
ReplyDeletehttps://imgur.com/l02CjTG
.618 retrace so far.
ReplyDeleteCash - looking for reversal below 3849 to fill gap.
DeleteHi Joe
ReplyDeleteWhatya think big fat kiss? Thanks for the charts, have great day. :)
hi Roger .. see next day's post (already up).
DeleteQuestion:(SPFutures) Is it possible that the low yesterday morning @3759.50 was the end of a 5 wave structure. This morning is a C wave correcting to 50% retracement 3811; 61.8 would be 3823. Would anyone have any thoughts?
ReplyDeleteRetesting broken close only TL
ReplyDeleteA look at 1hr cash (close only) -
ReplyDeletehttps://funkyimg.com/i/3aoum.png
GameStonk to GameStunk
ReplyDeleteCan only keep counting waves but we are not rich to central bank balance sheets so that is something I am considering when I get my bear goggles on.
ReplyDeleteI think the move down was corrective. Tag of major support at trend-line was precise, and imho move back above 3800 significant. Looks to me like one more wave up.
ReplyDeleteUp Volume was huge on Nasdaq,I warned about yesterday.
DeleteAgree, but I think a double correction would be even better to trick everyone ☺️
Delete..see next day's post - already up.
DeleteBack in the channel again and holding, well IMO now or almost never for some kind of correction, Im with TimH..short here with cover at gap close (3850ish) and hold for a bit. Gl all
ReplyDeleteCash - Retesting TL. 3841 is worth a try if we get there, 78% retrace. But I think they try to close gap.
DeleteNew stop for me on my short..todays high 3830ish..again Thanks Joe, Gl all
DeleteA new post is started for the next day.
ReplyDelete