Tuesday, September 17, 2019

Droning On - 2

U.S. Debt Clock: $22.57 Trillion
ES Daily Candle: Higher High, Higher Low, Higher Close: Trend Candle
Market Posture: Neutral and Probing Waves
Daily Swing Line: Up (Higher Low, Higher High)
Daily Bias: Up (Settle Over 18-day SMA)

Yesterday, we had counted three waves down as c = 1.272 x a, and shown on the chart below, along with the associated overlap. Nothing has changed except the hourly chart is shown instead of the half-hourly one to be able to fit today's waves on it.

ES Futures - Hourly - Smaller Triangle (Green)

Today, we counted out in excruciating detail a smaller triangle shown as green (a) - (e), above. By the time of the futures settlement, the triangle was proven out to be correct as the green (b) wave of the smaller triangle was exceeded upward, and the c wave of an overall zigzag appears to be building.

So, now, as earlier in the day, the question we ask is, "Are we getting a larger pre-FED triangle?" Such a triangle could indeed carry into the announcement and the press conference. While we don't know, we can suspect such. Such a plausible triangle is shown starting with the larger brown (a), (b) in the chart above. Of course, such a triangle would have to form perfectly in every detail. Today's waves are part of the reason I was very conservative on yesterday's call of just a-b-c down. Could it be more? Yes, it could, but for that to occur then 2,980 must be exceeded lower, first. That's not quite the same level of where the c wave following the triangle invalidates. That would invalidate below the (e) wave of the green triangle.

It's very nice to get some clear invalidation points for a change, as it aids greatly in wave counting.

Again, the waves are very compressed. The charts are very messy. A pre-FED triangle in this location would be suggestive of another high to follow. First, let's see if such a triangle forms properly. Keep an eye on overnight developments. The FOMC announcement is tomorrow.

Have a very good start to your evening.
TraderJoe

13 comments:

  1. Right now (i) of potential A (if not top is in) is deeper than recent (a) down, so maybe potential B of (Z) will morph into bigger triangle or something else that gives more price distance to B.

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    Replies
    1. Yes, it might very well. Staying loose and flexible here.

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  2. Price consolidation at round number. Larger trend remains up imho.

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  3. We havent talked about the DJI 30min since the triangle from Friday failed to materialize. Looks like we moved below circle 2 as well. Any chance we could update
    when handy?
    Thanks!

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    Replies
    1. The triangle that 'failed' to materialize made just have been this less proportional one in the futures. Dow 'may' be making a diagonal downward (as per notes below). FED volatility pattern may be quite unpredictable and affect different indexes differently (different numbers of different types of stocks).

      https://invst.ly/cbqr9

      TJ

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  4. If Im reading correctly, looks like (e) was violated.

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  5. Prior to FED: Yes, we know that a 'further' c wave is invalid upward, while the original 'c' wave, as shown, hit a 62% retracement on the downward wave. There are several versions of what can happen depending on the reaction to the FOMC. 1) larger triangles upward are possible, particularly if 2,993 is hit in the futures below, and then there is a strong rebound, 2) downward diagonals are next most likely to make a larger ((b)) wave.

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    Replies
    1. ..downward could 'also' be a simpler double zigzag (or rarer triple zigzag) for a larger B wave. The point being, "it does not have to start with a diagonal".

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  6. Here's the price since the announcement ...

    https://invst.ly/cbsqg

    TJ

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  7. This comment has been removed by the author.

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  8. YM/ES, off the LOD don't think it can be counted as 1,2,3 as the start of an impulse. Do think it can be counted as a-b-c or 1,2,3,4,5 complete where 5 is the extended wave. Therefore minimum pullback should be the correction of the 1,2,3,4,5 or worse.

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  9. A new post has been started for the next day.

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