Today was a reversal day, lower, in the ES futures after the NVidia earnings came out and trading began in the cash markets this morning. Price initially traded higher, sketching out an expanding diagonal which we showed in the comments for the prior post. When the diagonal was complete, slightly beyond the 1.618 extension we cited, then price reversed lower hard and fast.
The Principle of Equivalence requires that I show two plausible and valid scenarios for this wave as in the two-block below of the ES 12-hr futures.
The first count is the expanded diagonal count which is valid in every sense since wave v is longer than wave iii and wave iv is longer than wave ii. If it wants to it can still break lower to 1.618 the length of wave iii. It is not there yet. It does not need to do this, but it might.
The second count is the nested (i), (ii), i, ii count which is valid because ii is less than (ii), and because i is less than (i), allowing degree labeling definitions to hold.
Today closed the gap in the ES futures contract from Fri 10 October. It took quite a while, but this target, target #3 was met. Each of the first three targets (lower Bollinger Band, 100-day SMA, and gap close) were somewhat higher probability targets. The fourth target, target #4, is the 200-day SMA. It has a slightly lower probability of being met, until the current Head & Shoulders on the daily chart breaks down. But, if it does it would be in reach of ⓒ = 2.618 x ⓐ subtracted from ⓑ in the Expanded Flat that we sketched out before.
And this might complete the Minor B wave if that occurs.
Any bounces from here should respect the 18-day SMA since price failed there today. And as the note on the chart shows, either count is free to just break lower if it wishes. Of course, there can be some backing and filling, especially after what we think is a five-wave diagonal we counted this afternoon. It may be a 5-3-5-3-5 diagonal, but some overnight waves need to be looked at.
Have an excellent start to the evening,
TraderJoe
#1 is more plausible, a chop up into December should calm people down a bit. Thank you
ReplyDeleteWelcome. It could be that the second chart contains a degree violation, too. I'm still working on it, but ii might be 'longer in time' than (ii). So, if the second chart has a degree violation in it, it would favor #1 by a bit. TJ.
DeleteCongrats on the accuracy of the expanding diagonal that you described yesterday. Thanks!
ReplyDeleteWelcome. TJ.
DeleteIf we allow 3 to be bigger than 1 in contracting diagonal then all this move can be explained by contracting diagonal. In cash 5<3<1.. if this move.reverses.on Friday.morning to upside
ReplyDelete