Diagonal Confirmation & Follow-Through

Market Outlook: Likely Long Term Top Identified, Now likely in Minuet (iii), down
Market Indexes: Major U.S. Equity Indexes closed lower;
SPX Candle: Lower High, Lower Low, Lower Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

Yesterday, we wrote about the c Failure wave for a possible minuet wave (ii).  We had showed those who had looked at the post script written about the potential diagonal ending diagonal c wave, and said to confirm it, it must exceed the start of the diagonal in less time than the diagonal took to build. It did that today. The chart is below.

ES E-Mini S&P500 Index Futures - 30 Minute Chart - Ending Diagonal Confimration

The diagonal failure is clearly labeled. Further, you can see that the time of the blue arrow is less than the time of the diagonal. We said yesterday, the overnight waves were part of the diagonal - part of the previous trend. And, we counted the five waves down (shown as i - v, above) to a larger wave, shown as 1/A in this case.

So, the diagonal was confirmed as an ending diagonal, and prices continued to sink. The sideways wave now looks suspiciously likely a triangle, and 'could be' a B wave. If so, it is part of an A,B,C down wave for a wave of the larger flat we discussed over the weekend (see the post at this LINK). If not, it is part of an impulse lower.

Price has not exceeded the upper channel line yet. Price is now 100 points lower than when I suggested the c wave up might have ended. This is in distinct contrast to another site that said that they were expecting prices to hit 2,815 or possibly 2,880. <Gulp>. Wrong again at another significant turning point.

Whether minuet (iii) of minute ((iii)) is forming, or the larger flat is forming will be determined in the next couple of days. Right now, as best I can tell, price is not yet at the 90% level needed for the flat.

For now, as long as price remains in the channel, lower, or breaches it only by a partial bar, then one should still consider prices may be headed lower. If they break the resistance of the upper channel line by two full bars or more, then an up trend may be resuming.

Have a good start to your evening, and a good holiday.
TraderJoe