ES Daily Candle: Lower High, Lower Low, Lower Close: Trend Candle
Market Posture: Examining for a Fourth Wave
Daily Swing Line: Lower (Lower High, Lower Low)
Daily Bias: Down (Settle Below 18-day SMA)
Yesterday, we noted the case for extreme flexibility in counting these waves. We said we would not begin an upward count until the high of yesterday's candle was exceeded. With the overnight gap, lower, and subsequent follow-through, yesterday's high was cemented for the time being. Several of the better wave counters here noted the proximity to be able to make a 1.618 wave downward, and the market did that and slightly more. That being the case, this upward count, as a concluding wave possibility was published.
|ES Futures - 4 Hr - End of Intermediate (B)|
If the market has topped, and that seems more and more likely, then this is the best count to the Z wave of the Intermediate (B) wave. If you're concerned about the degree labeling, you can also make the case that iii is actually ((a)) in an expanded diagonal - as we showed in the Dow - and the triangle is minute ((b)) with a subsequent failure ((c)) wave. Either way, the effect is the same.
Have we, in fact, topped?
We know that price has overlapped the minute ((a)) wave up, in the downward direction, and that certainly is not good for any upward count. In the next days, we will be looking for a fourth wave as in the hourly chart below. IF the fourth wave forms properly and then makes a fifth wave down, then it is likely we will have topped. The only other alternate I see is three waves of a larger triangle, downward.
|DJIA Cash Index - 1 Hr - Fourth to Follow?|
Recall that the trick in the bull market was that the bulls never allowed fourth and fifth waves in the downward direction to form properly. So caution is still by-word until we see an impulse wave truly form on at least the hourly time frame. Also, note, with the overnight trading (Europe, Japan, etc.), there is no guarantee that the third wave has completed just yet. Certainly, the Elliott Wave Oscillator looks like a third wave.
Today in exquisite detail we counted out an ending diagonal - which ended a wave, and which was then exceeded upward by a three wave sequence on the 1-minute chart. You are encourage to review yesterday's notes.
Have an excellent start to your Wednesday evening, and remember that Friday morning is the payroll employment report.