Yesterday, prices broke for a bit, retraced down to the 78.6% Fibonacci retrace level almost exactly, and then rebounded strongly in the last half-hour. This type of sharp whipsaw action is characteristic of a possible triangle in formation. A suggestive chart is below.
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| ES E-Mini S&P 500 Index Futures - Hourly - 'Possible' Triangle |
Such a scenario is still in keeping with the "Volatility Crush" we noted in recent blog posts. Such a triangle might be trying to right the situation shown where the previous two peaks both have "double tops" - representing poorer alternation - a create a wave that does have better alternation.
Does a triangle have to form? It does not. The cash market is not even open yet, and the potential d ? wave could be a second wave in the downward direction. So, the first thing to do is to see how prices react to an upward 78.6% retrace. If they exceed it by quite a bit, a possible barrier triangle is yet another common and realistic option.
In short, the game of chicken continues until confirmation occurs of a completed wave set in the upward direction. The S&P500 cash index did indeed try to break it's upper wedge line yesterday, and then prices quickly fell back into the wedge. So, it is something to keep an eye on. The definition of a 'possible' triangle is useful in that it provides some rather exact invalidation points to help in establishing the true nature of the current count.
Prices should not travel below the c wave to remain in a triangle configuration. Yes, it is also possible for such a triangle to morph into an ending diagonal wave, as well. We just have to keep our eyes on things as we are likely in a smaller degree Fourth Wave Conundrum - and they happen at every degree of trend.
Have a good start to the day.
TraderJoe
Have 3 measures for potential end of this leg up in the 2924-2928 area.
ReplyDeleteES futures just broke through the high. Dow futures have not attained 78.6% yet.
ReplyDeleteThis means the barrier triangle, ending diagonal or more (..further impulse) is possible for the ES. The daily slow stochastic is still embedded.
DeleteES 30-min price closed over the high which rules out the triangle and barrier triangle. This leaves only ending diagonal and further impulse. There is already a downward overlap.
DeleteThe DOW died at exactly 78.6% upward. Possible triangle or worse, there.
DeleteThe DOW has a lower low than yesterday.
DeleteS&P500 opening gap closed.
DeleteThe RUT has a lower low than two days ago, and 'currently' it's daily slow stochastic has become un-embedded.
DeletePossible truncation of the 5th of an ED in the Dow?
DeleteWorking on gold squiggles but the bigger picture it should get down to the lower channel boundary on the 4hr.
ReplyDeleteHanging under mid line now.
On SPX-USD, nice inverted H&S (4/9 low was H). Head to neckline measure was where we encountered our short term (?) reversal this morning.
ReplyDeleteES outside day down, so far.
ReplyDeletePossible ending expanding diagonal? (SPX-USD)
ReplyDeleteWith a lower low, SPX can now have a diagonal lower... watch the lengths of the waves!
ReplyDeleteThis is the possible diagonal...watch the lengths of the waves closely.
Deletehttps://invst.ly/akewj
TJ
Agreed. I was just about to ask if you see a leading diagonal down (Im viewing the SPX-USD 5min). Thx
DeletePrices have now broken the potential diagonal to the upside - making the lengths of such a diagonal acceptable.
DeleteNow a new lower low.
Deletearen't leading diagonals 5-3-5-3-5?
Delete@jkp3; no, not always. Some are 3-3-3-3-3; the Elliott Wave Principle is clear on that point. Further, we know prices were already exceeded lower - thus proving out the leading diagonal.
DeleteThank you
ReplyDeleteThere is a new post started for tomorrow.
ReplyDelete