Trend Line Breach and Recovery

U.S. Debt Clock: $22.77 Trillion; prev $22.71
ES Daily Candle: Lower High, Lower Low, Higher Close: Yin-Yang Candle
Market Posture: Examining for a Fourth Wave
Daily Swing Line: Lower (Lower High, Lower Low)
Daily Bias: Down (Settle Below 18-day SMA)

ES futures prices were steady overnight, then fell off sharply on the ISM - Non-Manufacturing report which showed a decline. The drop was initially still part of some type of third wave. Prices broke the trend line from minute ((a)) through X2 and stopped at a 78.6% retracement of Wave X2. (Keep in mind that many daily ((b)) waves are 78.6% affairs, as shown in the current alternate below). Then prices recovered the trend line and continued to close right on the lower daily Bollinger Band.

ES Futures - Daily - Nearing S/R

The real question now is, "Is a C wave or a wave 3"? The extent of recovery today was a bit greater than 38.2% of the third wave down. For a fourth wave, it is likely that the lower dashed orange line which was prior support should hold as resistance along with the 100-day SMA.  If it doesn't and the diagonal downward is overlapped upward, then it is possible that all of the waves since X1 are part of a sideways triangle. We shall see. A new low below today's low is needed to call a fifth wave downward.

Here is the hourly chart of the Dow, again, with today's price movement. We can not assume a fourth wave will be made properly. But, it is possible. Since, the second wave in the ES is definitely a flat, then more than likely a fourth wave will be a sharp or triangle. Today has a good start on that.

DJIA Cash Index - Hourly - Channel for a Fourth?

Today's fifth wave low was, in fact, divergent on the EWO as per The Eight Fold Path Method. And the EWO does have the signature of starting to work on an upward wave, like a fourth wave. But, this one could be a beast, and the Payroll Employment Report is tomorrow morning.

Have a good start to the evening.
TraderJoe