ES 4-Hr Count

The ES 4-Hr chart has only 83 candles since the truncation high (red *) and therefore it is a little hard to be more certain of the count yet. The chart is below, and the rationale is beneath the chart.

ES Futures - 4 Hr - Tentative Count

If the lowest trough low of the Elliott Wave Oscillator (EWO or AO) is reserved for wave ③ of iii, then the first divergence may well be wave iii. The waves are nicely in a channel and today's up wave contacted the EMA-34. Further, at present wave iii is 1.618 x wave i. And using this approach there are no degree violations that I can detect.

The best alternate is that wave red iii is yet to come with a further lower low, perhaps breaking towards the 2.0 or 2.618 extension. That remains to be seen. Surely, a further new low that only nicks the bottom could be the wave Ⓑ of a flat for wave iv to provide alternation for the failed double zigzag of wave ii.

Let's see how it goes. Have an excellent start to your evening.

TraderJoe

Whippy

In the prior post, we showed some of the weaknesses of the potential daily wedge count. Today, on the news of the PCE Inflation report, the weaknesses became more significant. Here is a side-by-side comparison of the ES daily and weekly time frames.

ES Futures - Daily vs Weekly

On the daily time frame the price bias is down as price is below the 18-day SMA. The first target of the lower daily Bollinger Band has been made. The next target of the 100-day SMA is in play. The daily bands are being bent downward a bit. The daily slow stochastic is one day away from embedding. It hasn't yet. It doesn't have to. An outside day up candle, made yesterday, was negated today, setting a trap for the bulls.

On the weekly time frame the bias is neutral because price closed on the 18-week SMA. Price has been turned lower by the resistance of the combination of the upper weekly band and the 100-week SMA. The Bollinger Bands are constricting. The weekly slow stochastic just lost the 79 level, and therefore, the first target of the 18-week SMA was reached. The next target could be the lower weekly band.

On the intraday timeframe, today, after the overnight gap down we were able to count a diagonal, lower, which was likely a small degree fifth wave and ended a downward wave as it was exceeded higher in 'less time' than the diagonal took to decline. Here is a 10-minute intraday chart of the SPY cash index.

SPY Cash - 10 minute - Two Upward Zigzags So Far

The downward diagonal appears on the lower left; draw in the contracting diagonal trend lines as an exercise. Then the new higher high in less time appears at about the 11:50 hour. There was then a 78% wave downward in three waves. This alerted me to a B wave, an X wave or a second wave of a contracting diagonal upward.

Next on the SPY 1-minute chart I counted up - in real time - the five non-overlapping waves that are shown with the green arrow in the center of the chart. (See the comments in the prior post for details). This turned out to be the Ⓐ wave of another zigzag upwards. That zigzag stopped just short of price equality with the first zigzag upward. As the day ended in cash another zigzag upward was not completed, but it did get a good start. Interestingly the downward retrace levels for the two down legs are nice & deep at 78% and 75%. The second downward leg is just short of the length of the first.

So, either a contracting diagonal, upward, is under construction or a failed triple zigzag will have been made. Either way, the rules and guidelines are clear for how to handle the situation.

The daily Dow futures (YM) made a lower low today and undercut the December low. This adds another wrinkle to its wave count and makes it more difficult to count upwards as well. 

As I have said, no market movement to the downside will surprise me. The upward wave counts are the difficult ones. Again, to resume an upward count, it is the bulls that have the onus of crossing the ES level of 4200 and closing there.

Have an excellent start to your evening and weekend.

TraderJoe

Wither The Wedge

Long time readers of this blog know that if a wedge-shaped price pattern is to form as a true diagonal, then the up waves AND the down waves must form as true zigzags. That said, in prior posts we noted that if the wedge was to form at all, it would ideally form from a lower low than prior days. Yesterday, as the daily chart of the ES futures shows, we got such a qualifying wave down. See the red arrow in the left panel, Panel 1.

So now the trend lines of the wedge form a better wedge shape. But, in the considerations for a true diagonal wedge we still note the following conditions that detract from the probability of a diagonal.

1. The retraces are not 62% or greater.
2. The December bottom is very, very messy. It is not crisp (Panel 1, red circle)
3. The early December drop can be also cleanly counted as a Flat wave (Panel 2).

'Usually' (most often) in a diagonal we look for wave 2 to be significantly longer in time than wave 4. And, in this case, it is really unclear how long in time such a second wave would be. Where does such a zigzag actually end?

Further, the current down move - while it can be wrangled into a zigzag (Panel 2) - is also not crisp. And we just don't know that downward movement is over.

So, when faced with such situations we must simply note that while the probability of a true diagonal wedge is a bit lower because of these factors, nothing absolutely rules it out at this point in time. What would convincingly prohibit a contracting diagonal is if the fourth leg became longer in price than the second leg as that would break the rules.

Until then, we must be flexible, cautious and patient and use technical indications as best as possible.

Have an excellent start to the day.

TraderJoe

A Curious Study

Foreword: nothing in this study alters my current count. In fact, portions of it reinforce the count, as far as it is taken to this point.

Long-time readers of this blog have seen me call out how the ES futures can be down -20 or -30 points in the overnight, only to have the cash market open and to see all of those overnight declines simply vanished or erased from the cash market prints. Here is a study in the opposite direction.

First, looking at the SPY 15-min cash index on the day of Wednesday February 15th, we see that the day may be counted as a diagonal wave. The wave lengths are correct, with ((5)) < ((3)) < ((1)), and ((4)) < ((2), with wave ((4)) overlapping wave ((1)).

Overnight has a significant gap down, and the "start of the diagonal is taken out in less time than the diagonal took to form". IF this is a true ending diagonal, then it is significant, and so far, it has been partly responsible for a larger downward wave, including another gap down from the 16th to the 17th.

Now let's look at the futures, including the overnight futures, on the day of the 15th and into the 16th. Here is the chart of the ES 15-min during that period.

Now, you can see where the cash session ended at 16:00 ET - at the beginning of the pink square. And what do you notice? There are several additional local highs, taking the futures print from ~4,160 to near ~4,170 at 3 AM. Then, there is a drip, drip, drip lower in the low volume until the 08:30 ET bar on the 16th - which is, of course, the news bar which delivered the economic news of the morning.

So, what is going on here?

Well. What else do we know? We know - almost for certain - that due to the sleep cycle - the vast majority of traders in the U.S. money centers (NY, Boston, Atlanta, Miami, Chicago, Dallas) are fast asleep. Yet, someone, or something created these extra waves. It did happen. The waves are in the market. And, yes, we know that Asia & London may begin more active trading as the New York market is still sleeping. 

Now, here is an assumption. The assumption is that the CME's price algorithm is in control of pricing. Regardless of, or maybe because of, the low overnight volume, nothing is going to happen without the CME market-making algorithm, or perhaps those large companies (Goldman Sachs, Blackrock, GTS, etc.) that are allowed to make markets and their algorithms operating in the market. And, regardless of the specific market-making-program, or who owns it, someone is monitoring overnight markets to ensure that there are no untoward developments (war, asteroid, earthquake, hedge-fund blow up, etc.).

Now clearly, whomever this someone is, they are working third-shift versus the eastern time zone. You are asleep. They are working third-shift. Did you ever work third-shift? Many people haven't. They aren't aware or don't fully appreciate that there is a whole minor economy operating between midnight and 8 AM. OK. But what are these people doing?

If they were like me, when I worked third shift, they are doing just what you'd expect. They are acting on behalf of their employers and largely doing what their employer requests - as long as it isn't illegal. But what are they specifically doing?

Let's just suppose that the night trading desk manager (DM) is as versed in Elliott Wave as you or I am. Why not? It's not that hard. The DM says, "oh my gosh, there's a valid diagonal in the cash market. Probably a lot of traders and institutional analysts recognize it." So, what are the DM's instructions to the rest of the trading desk or the algorithms? "Bust it! Just bust it! Do whatever you need to leave the market on 'five-up' still but don't go over the prior daily high until we know more."

So, they take it up in an after-hours grind trying to bust the stops. They take it up +10 points, and depending on some trader's leverage, they run at least some of the stops. Why? Because the further upward prices leave cash-session traders scratching their heads saying, "wait: after a diagonal, prices should be going down from here. Not up. This is not at all what we expected."

Yet, they leave the market on "five-up". They take all the time in the world, which creates more frustration for traders. They don't go over the prior high, and then, they head down when everyone else is fast asleep. No competition - or less competition anyway.

Is this insidious? Yes. Is it manipulative? Well, that depends on your point of view. If you're a dumb-money retail trader, it seems unfair & manipulative. But it certainly is legal. Money-center traders are allowed by regulation to make a profit. In fact, you are allowing them to do this by the laws you allow to exist on the books. The really discouraging thing would be if your own broker is participating, allowing, or even encouraging such behavior. 

For now, without a "Retail Trader's Group" or some sufficient numbers to try to encourage reform, it will definitely continue to go on. It's too profitable for them. And further, doing something different would require 'a different paradigm' of fairness between retail traders and market-makers, and that paradigm does not exist yet - that I am aware of. 

So, what can be done about this? What's the reason for the post? Well, the first thing you can do is to be actively aware of the phenomenon. Ira Epstein refers to the phenomenon as the "ying-yang" effect, as the trade from active news reports is reacted to where the sun is rising next.

The second thing one might do is to try working some third shifts. See if you can spot them 'doing it' in real time. If so, you might spare yourself some aggravation. Third, if you can't work the overnight, you might actively study the overnight charts to see what patterns were made prior to the cash opening to see if your wave count still makes some sense.

If you're an ETF trader, you might care a little less because there is less after-hours trading in ETF's although there is still some. And, if you trade futures, you might care a little bit more because it can impact your trading style. But regardless of what type of trader you are, you should likely care about the issue of who are the market players - and which are allowed to have just how much advantage over the others. Is it really meant that there will always be large money players that can steam-roll over other traders? And, if not, how can it be corrected. Think it through.

This is the second post this weekend, and the local EW count appears in the first one if you are interested.

Have an excellent rest of the weekend.

TraderJoe

Count & Alternate

On the ES 4-Hr chart, below, here are the waves as we have actually counted them since the break of the wave (iv) trend line and possible truncation of wave (v). We haven't labeled the most recent down wave yet until we find out if it's a nested wave beginning or if Friday was just a small degree fourth wave Flat, as we suspect.

A key question will be whether the Support / Resistance line at 4,100 holds or not.  If it doesn't hold, it is up to the bulls to prove they can get over the 4,200 level. With that idea in mind, here is the best alternate count we could imagine on the daily chart, and then how that translates over to the 4-Hr chart.

The above daily wave chart suggests it may be possible to construct a contracting diagonal on this time frame. But, so far, there are some things to be cautious of. First is that the diagonal did not make a full 62%+ downward wave for minute ((ii)). Second, the fourth wave, ((iv)), would not really have looked to touch the lower trend line yet, although this could change. And, as far as the Elliott Wave Oscillator, there is the expected divergence on ((iii)) versus ((i)), but a fourth wave has not yet shown a good signature close to the zero line. This could change, too. 

So, here is a 4-Hr count that would agree with the above, but it has some problems that are discussed below the chart.

So, above, minute ((iii)) in the daily chart would be at the high, and minute ((iv)) would be under construction. But the problems are that if minuette (b) is a triangle, then the 'c' wave of the triangle is 99%+ the length of the 'a' wave of the triangle. That would be a very unusual relationship for a triangle. Further, within wave (a) down, wave ii is likely a degree violation because the ((B)) wave portion, the down portion, of ii would be 'longer-in-time' than its wave i counterpart.

So, all-in-all, the odds favor the current downward count. The onus is on the bulls to get price back up over 4,200. If they do, it would be 'mildly' surprising, but not too difficult to handle in the count. All we can do is count and analyze the waves. We don't make them. But we will be fair & balanced and try to provide both sides of the argument as we see it. 

Sentiment is 'mid-range' here and is not of too much help. Yes, it is true that the Fear & Greed Index recently hit a significant high. But, sentiment surveys and put-call readings are mid-range. The VIX might indicate a kick-off but needs to make a higher daily high. So, one must remain flexible, calm and patient.

This is the type of work that is involved in real-life wave counting and it is likely few people undertake it in this detail.

Have an excellent rest of the weekend.

TraderJoe

IF it's an Expanded Flat

IFF it's an expanded flat, the Fibonacci people ('Smart Money' ?) nailed it at c = 2.0 x a when added to b on this 15-min chart of the cash SPY.

And if it's an ending diagonal it does meet the rules. But if it's a ending diagonal, then the start of the diagonal should be taken out in less time than the diagonal took to build. The reverse, of course, is that the local count is a-b-c down to the low, and the diagonal might be leading.

There are not too many other conclusions from today yet other than "while there are lower highs, lower daily lows are needed to better establish a down trend". Let's see how it goes.

Have an excellent start to the evening.

TraderJoe

Is it Possible for the Dow to Go Over the All Time High Again?

Can the Dow diverge? Yes! In the 'Classic' market top, the narrowly based Dow Industrial Average goes on to make newer highs while the 'more broadly based' indexes stall and show the "damage beneath the surface". Will that classic scenario happen again? Remember back to our post of Jan 21, 2022 where we posted this alternate count. See the red line as the alternate count. We said a fifth wave up was 'possible'. Since that time, we have been trying to count the down movement, and we have done that and will try to see if that still fits.

But if we go with this long-term count on the Dow since 2009, then it is possible a fifth wave is still under formation. This count provides alternation between wave (2) as a 'running flat' and wave (4) as an expanding triangle. It is likely that the triangle would provide the best alternation.

Keep in mind that it is 'also possible' to stick a (5) where that red 1 is ending the entire up count on a divergence in the RSI, even though a long wave four with alternation was not counted.

But, barring that, then it is possible that the Dow could be in one of these two types of diagonals, both which are the ALTERNATES at this time.

The expanding diagonal on the left 'technically' works in terms of the length of wave (3) vs (1) and (4) vs (2). But the two issues with it are the very shallow retrace for wave (2), and the way the wave (3) vertex cuts off some of the points within wave (3).  In some ways - with only one wave left to go - it is the easier pattern to complete, although wave (5) is expected to be longer than wave (3).

Similarly, in the potential contracting diagonal version, wave (2) has not made the classic 62% retrace, but at least its retrace for a second wave is deeper - at 38.2% - than in the expanding diagonal version. But here, many more waves are needed to bring this pattern to fruition.

Again, both of these patterns are made possible by the ALTERNATE count we provided in response to a comment on the blog where the DOW 'only' has (A), (B), (C) down as was shown in the following chart.

Part of the reason for raising this query is the DOW made a slightly higher high yesterday, and the formation at the right-hand side of the chart 'might be' a triangle that points upwards.

Have an excellent start to the day,

TraderJoe

"If You Could Turn Back Time ..."

With all apologies to the Cher lyric, the Dow's count was bothering me just a little bit. I had started counting an expanding diagonal, and then the wave lengths appeared to get out of kilter. So, I went back to it this morning and made another 'hidden' discovery. If you remove the truncation wave at the very top, as we did with the S&P 500, then all the lengths for the diagonal work out! Here is the weekly chart.

And, if you look at the location of wave Y, it not only made the 78.6% "deep retrace" expected after the diagonal, but arrowing back in time, you see that wave (2) ended up at the location of the prior 4th wave. That is really awesome. Further, the Y wave did not fail to make a new high over the W wave in the Dow like it may have in the ES.

Now, that is finally a count that makes some sense, and it agrees with the 21 week-34 week Fibonacci timing we showed on the ES futures (S&P 500).

To show why this count is even further justified, here are the weekly charts of YM Futures, AAPL, TSLA and MDY (Mid-Cap 400).

All of these charts show the diagonal. In fact, it's almost impossible to count them any other way. Note that the MDY has very similar characteristics to the Dow, and it is respectably close to its prior fourth wave, as well.

It looks like the proof is in the pudding. The slightly lower low for the Dow and the MDY should indicate that the diagonal is leading. But, for that we need to see that low broken again. Now the question becomes does the Dow live up to staying within that new smaller down channel on the way lower on that first chart, above. 

Have an excellent rest of the weekend,

TraderJoe

Tentative New Channel

The Golden Section may have been made today. The ES weekly chart, below, shows what this means. It is possibly (a Fibonacci) 21 weeks down, and 34 weeks back up.

ES Futures - Weekly - Golden Section?

The up wave may be a failed double-combination before a strong third wave down. A tentative new base channel has been sketched in. If we go into a strong third wave, downward, it should break the lower parallel trend line and perhaps make a (3) = 1.618 x (1) in length. In order for a channel to fit the points at (1) and X, it seems as if there should not be much more price movement upwards, or the lower channel boundary would begin to cut off those markers. Let's see how it goes.

Have an excellent start to the evening.

TraderJoe

And the answer is ...!

It is disconcerting sometimes when you write a blog and try to figure out who puts their thinking caps on and who does not. For those of you who responded to yesterday's inquiry, they were appreciated, so don't think the above comment applies to you. You on the other hand stretched and tried to find something of value to contribute to the blog, and that is appreciated. But now, what I understand to be the true and correct answer must be provided, and I hope it gets you to thinking in a slightly different way. The answer appears in mathematically succinct form on the chart revision, and again below the chart.

There are no assumptions in this answer. It is first precisely true that buying and selling are actions that require either human or machine input. There is no other way to do it that I know of.

But further, the only way that the up fractal (that high near 417 on 2 Feb) could be made is if the buyers estimate that at any price beyond there, within their time horizon, the Buyers' Estimate of the Probability of Success falls to 0, or as infinitely close to zero as is possible. This is given the mathematically precise symbology of BePs == > 0. If there are no buyers, price simply can not be pushed higher because sellers have no one to execute a transaction with.

Then, at the down fractal (which started at the low of the day on 3 Feb) similarly the Sellers must have Estimated that their probability of success had fallen to a level approaching as close to zero as is possible.  This is given the mathematically precise symbology of SePs == > 0.

Now again, buyers and sellers can be humans or machines. And there are many, many ways and methods one might use to estimate probability of success. Let's take a couple of example cases.

Example 1 - Relatively trivial

At the up fractal, buyers realize it is only 15 seconds to market closing time, and there is what is perceived to be a huge economic report coming out the next day. Buyer decides he/she/it will place no more cash trades that day because in his time horizon the probability of success drops to near zero. Buyer is estimating based on 1) time, and 2) fear of what the report reaction might be. This deprives sellers of anyone to sell too. BePs == > 0.

Example 2 - Less Trivial

At the down fractal, sellers realize that a big economic report has just come out AND there is a huge, yawning gap in the chart. Sellers estimate that the gap might fill, and their estimate of their probability of success for further selling is getting low saying things like, "temporarily, at least, most of the meat has been taken out of this decline, and it could be a trap. I'd better lighten up on my sales and think about reversing." This deprives the market of anything but buyers, and price rises. SePs == > 0.

Again, again, again  there are many ways buyers and sellers can estimate their probability of success.

For example, some people might use their gut, and say, "I think my chances are good here. I'll buy". Other people might use Bollinger Bands to derive an estimate. Machines might use their knowledge of volume and how many positions are in the market on a particular side to make their estimate. Another person might use an RSI indicator and say, "the market is over-bought here, I'll sell." Another person might use a MACD & a trend line and say, "the market is over-sold here, and the trend line broke to the upside, I'll buy on a pullback". Another person might say, "Define the risk and the reward, and always take a profit at 1.5 times the risk." Yet another person might say, "you know what, every action has an equal and opposite reaction. So, if there's a sell-off, I'll wait for a big rebound before selling."

This is the way it happens. This is the definitive answer to the question, as best as I can tell. There is nothing else to it: all day long (and in the case of the futures, all night, too) buyers and sellers, whether they be machines or humans, are estimating their probability of success and placing orders in the market based on that estimate. The manipulators that others referred to in their relatively good answer, just estimate that their probability of success is very good based on a lot of factors, but probably their size, and what they could withstand in the way of losses, or their ability to use machines for speed, etc.

The Elliott Wave Principle is just another way to estimate those probabilities, and can be used alone (not too recommended) or with other factors. But, the bottom line: somehow you will estimate your probability of success in buying or selling using whatever emotions or information you chose or are exposed to, and you will place your orders - or not - in the market based on that judgement. The machines will do the very same (probably excluding the emotions part).

Think it over. Does it make sense? How good are your estimates of this probability? Something to chew on.

Have an excellent rest of the evening.

TraderJoe

How Can It Be ?

While many people are getting turned and twisted in discussions of economic factors and whether or not they will lead to a stock market rally or decline, I have a different matter for you to consider. Does your economic theory answer these two simple questions regarding the SPY cash chart, below?

How can it be, that not one person (or company) in the whole world wanted to buy cash SPY over 417, on the evening of February 2??!! And how can it be that not one person (or company) in the whole world wanted to sell cash SPY under 411 on the morning of February 3 after the economic report?

Keep in mind, there are thousands, perhaps millions of people and/or companies who are candidates for buying and/or selling this index ETF. Why did none of them act to exceed these limits shown? I mean none. We know that precisely no one did because there are no trades above or below these prices at least in the cash market sessions. 

In your economic theory of interest rates, money flows, currency transactions, inflation rates, intermarket divergences, etc., etc., etc. how is this pricing phenomenon explained?

Have an excellent start to your evening,

TraderJoe 

Hiding in Plain Sight

My readership is falling off. People are bored, they are tired of winter, electrical outages, snow and they are tired of being whipped around by the markets. Over the weekend, sort of like doing a crossword, I asked myself, what could the structure of the Y wave from Friday's post be?  I went over it and over it - sort of like that clue you just can't get in the crossword puzzle. But I ran into problems. If I was honest there were a few overlapping waves where there shouldn't have been. Then, this structure began to fall into place when I looked at the time relationships and not just price. This is the daily chart of the ES futures in wave format.

ES Futures - Daily - Hidden Triangle?

This chart shows in wave format (where the vertices of the waves are accurately depicted) the structure of a triangle that may have formed over the holidays. I'll let you ruminate over the chart. I'll only say that it does meet 'the rules' for a running triangle. Although some continuation may be expected from this count, the presence of a triangle would have significant negative implications for a true bullish wave upward. 

Some date suggestions for termination of the upward wave are shown on the right-hand-side of the diagram. These would fit within the 34 week +/- Fibo range in the prior post. 

One thing that can be said from the pattern is that the prior minute ((a)) wave eventually held as support. Further, the descending triangle trend line was back tested by the market, and it held overall. Another positive of this analysis is that it greatly simplifies it into the a-b-c structure. Without that simplification there may be "too many" diagonal waves in the wrong locations as seemed to be forming on the short term intraday charts.

One can criticize the pattern for the outsized ((b)) wave. Still, it is less than 2.618, and as far as I know a triangle is one of the few patterns that corrects for degree issues because the measurements are always taken to the (e) wave. So, that seems to nullify that criticism.

But there is other criticism. Did I predict such a pattern? I did not. Did I count it as it formed? I did not. I don't know anyone that has. Still, that being true, I don't want to miss the pattern possibility in study of the past price action. It can aid in setting future targets in price and time, some of which are shown.

Can the W wave be exceeded? Yes. That is the usual expectation of a Flat wave. But also, be aware that if a strong downward third wave is to form, such a pattern might also fail to have Y cross the W wave terminus. Double-combination waves often fail slightly as second waves. 

This more simple ((a))-((b))-((c)) pattern up also allows that the tentative X wave location is also the location of Intermediate (1) down in a larger diagonal. You usually can't have that pattern without a simple zigzag in the wave (2) position. This provides it.

So, what if a triangle didn't form and the pattern is an expanding diagonal C wave instead? That is possible providing the futures cross 4,255 so that a fifth wave is larger than a third wave. I'll try to address that one in a later post. But keep in mind that expanding diagonals are supposed to be quite rare creatures. It could be there, but I tried counting it and ran into problems (one of which is the terminals are not cleanly along the trend lines). And, further, the Elliott Wave Principle and other wave references whereas indicate that running triangles are really very common and are often mistaken for other patterns.

I'm not sure what to do about those readership problems. Maybe the triangle has lulled some to sleep. Maybe those who were in such urgent need to find a third wave got burned. Some of us here were trying to count a choppy diagonal downward. Maybe we will have to resume. Maybe it will be a contracting diagonal, instead. Maybe the third wave is nearing. 

As always, we just urge caution, patience and flexibility until the situation becomes a bit more clear. This is the third post this weekend and if you haven't read the first two yet, you might like too now.

Have an excellent rest of the weekend.

TraderJoe

Let's talk 'Time' for Stocks

As a follow-on to the previous post, we noted that the down wave counted as Intermediate (1) currently consumed a Fibonacci 21 + 1 (or 22) weeks starting from the truncation bar. Not perfect, but very close. Now in the chart below, we examine what might be the length of time from that low.

ES Futures - Weekly - Golden Section ?

When we do this study, we see the market is currently at the position of a Fibonacci 34 - 2 weeks (32) weeks in time. Can we allow that in the next two-to-four weeks we should know if the market wants to make a turn lower or not?  If the market should trace out the Golden Section, it may indicate the timing is ripe for a decline, whereas if the Golden Section does not appear in this window, then that would suggest the timing is going out to 55 weeks, and that might put us near or over the high. Let's see how it goes.

On a different matter, this is one plausible count in weekly GOLD. A downturn may have started but we are not out of a daily channel just yet for the current wave. 

GOLD (GC) Futures - Weekly - Expanded Flat ?

Readers of this blog will note that price has approached the 78.6% Fibonacci retracement level, and that the Minor C wave is still inside of 2.618 x A when added to the Minor B wave of an Expanded Flat. These are the practical maximums for this count. On the daily price chart in Gold, this is possible.

GOLD (GC) Futures - Daily - Minor C in a Wedge?

The current count would be a wedge-shaped Minor C. The only fly-in-the-ointment is whether a Flat is being made for a fourth wave minute ((iv)). But readers of this blog know to be on alert for the potential of an overlap and or channel break-and-backtest-with-failure which would tend to confirm the count is completed. Please note at the current time, I reserve the right to up the degree of these waves to Intermediate pending whether or not prices go over the high or do reverse here.

Have an excellent rest of the weekend.

TraderJoe

Revision to Weekly Down Count

The diagonal possibilities are likely invalidated as of this morning. That makes the downward count potentially more bearish - eventually, not yet. Here is the revision on the weekly chart.

ES Futures - Weekly - Count Adjustment

The down wave from the high, excluding the truncation bar (red asterisk *) is a regular non-overlapping impulse with wave 4 shorter than wave 2 in price, time & complexity for it's alternation. It is possible the pattern is attempting to regain the 50% or 62% Fibonacci level. The MACD indicates a non-divergent low for (1), a divergent low for X, and a return to the zero line.

The chart is read as, "a trending impulse Intermediate (1) wave down consisting of five Minor degree waves, and corrective Intermediate (2) up, consisting of a complex flat wave". There were a Fibonacci 22 (21 + 1) weeks down, and more than that in bars to the upside.

If correct this suggests a more bearish outcome if and when Intermediate (3) gets underway downward. Again, this chart attempts to adhere to all definitions of degree labeling. Within the last minute ((a)), up, and ((b)) down of Minor Y, there may be a Flat wave.

Have an excellent rest of the day.

TraderJoe

Thirteen Candles

Today was the FOMC rate announcement of 0.25% increase and the press conference that followed it in which Chair Powell noted that disinflation expectations are somewhat beginning to become anchored in the public. On the dovish result & tone in the meeting, the market bolted to the upside in an impulse. That impulse is shown below on the 3-min chart of the ES futures.

The impulse portion contains 22 candles (Fibonacci 21 + 1) or if you measure it on a five-minute chart contains Fibonacci 13 candles. It also contains a running triangle which helped me measure for the fifth wave. The waves are counted with degree labeling in mind.

If yesterday was 'five-up' & today was 'five-up', then for a corrective wave, the move might end here on another MACD divergence on the 4-hr chart. Or, if a further impulse is to be made, a further up wave needs to be looked for.

There are so many overlaps on the 4-hr chart of the ES that the high and the low of the impulse shown above are important. Let's see how it goes.

Have an excellent start to the evening.

TraderJoe