Tuesday, October 15, 2019

Triangle Continues

U.S. Debt Clock: $22.83 Trillion; prev $22.82
ES Daily Candle: Higher High, Higher Low, Higher Close: Trend Candle
Market Posture: Neutral and Probing
Daily Swing Line: Up (Higher High, Higher Low)
Daily Bias: Up (Settle Above 18-day SMA)

Yesterday, we made an interim post as a heads up, that there were only three waves up and a failure could have resulted. But, we plainly stated it was only a potential count and that the point loss on the day was minimal. Further, price settled above the 18-day SMA and the daily slow stochastic was not over-bought. We said - because of only 'three-waves-up' - that any upward further progress might be by diagonal wave, and we could wait to see if a diagonal started forming. Today it did.

So, the flip side of the completion count is the 'continuation' count where the large daily triangle is now likely a continuation pattern and not a terminal pattern. Here is the chart below, showing the triangle as the likely continuation pattern.

ES Futures - Daily Close - Continuation Count

So, if an upward diagonal forms properly, it would likely be the minute ((a)) wave of the Minor Y wave. Then, there should be a pull-back for a minute ((b)) wave, to be followed by a minute ((c)) wave higher to end the Minor Y wave.

Again, the purpose of this Y wave would be to see if the Intermediate (B) wave wants to get to 1.27 or 1.38 times the length of the Intermediate (A) wave down to the December, 2018 lows. It is fine with us if it does.

It is worthwhile for the next few days to pay attention to the overnight futures and earnings. Today, the bank earnings were the driver. It will be interesting to see other non-financial sectors, soon.

If we get a diagonal minute ((a)) wave up, we will post it in the comments. As of the settle we were waiting for wave (iii) of such a diagonal to overlap wave (i).

Until there is more to report - have a nice start to your evening.


  1. Hi ET, Great analisys, thank you !!!

  2. Looks like the futures just overlapped for wave (iv) of minute ((a)) as a diagonal.

  3. sorry for all the comments what Im trying to say is that a diagonal like this have degree problems 1 of (C) is bigger than all of (A), and can't have 12345 with 1 at (C) because 3 can't be bigger than 1 in a contracting diagonal either.


    1. I believe this keeps degree intact.?

    2. My suggestion is to 'keep it simple'. IF a new high is made, just consider the first a-b-c as the sub-waves of the larger degree (i), as shown below.



    3. On a smaller time scale (1 Min) the chart below just shows you what the typical expanding diagonal looks like - if it completes. Please note the signature of the EWO, and the fact that it is difficult to count the waves any other way without degree violations.



    4. Here's where the smaller pattern is at the cash close. These are very nerve-wracking patterns due to the deep retracements. Notice how b of ((5)) had to remain shorter than ((2)), and it did by ticks. And now wave ((5)) is longer than ((3)) in time.



  4. There is a new post started for the next day.