One of the Market's most Frustrating Tricks

We said that the upcoming Minor B wave could literally be any corrective sequence. This includes a zigzag, or multiple zigzag, a triangle or a flat. Like it or not, one of the market's most frustrating tricks is to make a flat wave. Let's first examine this excerpt in the ES 4-Hr futures from the March 22 bottom.

ES Futures - 4 Hr - Flat

If you examine this chart closely, after the first five-waves-up, you can see the three-wave structure, down to a, the three-wave structure up to b, and the five waves down to c. Wave b 'just' nicks over the top. As much as one would like to prove anything in Elliott Wave work, would you like to prove-out to the extent possible that this is a flat? OK. Here are some key concepts.

1. It is wave ((5)) that is as long as wave ((1)), not wave b. One key measurement for an Elliott wave is that very often - when the third wave is extended - the fifth wave equals the first wave in length. This fits like a glove. In the above sequence, the third wave ((3)) is the extended wave.
2. One of the only ways an Elliott Wave makes five-waves down, as with c, without further waves lower, is at the end of a FLAT. (Another way is five-waves of a c wave in a zigzag or a triangle).
3. Without this flat, the down wave would not have exceeded the time of the up wave.

The analyst would normally expect the down wave to exceed the prior wave ((4)) low, except in this case - which is the case of the "truncated flat". The truncation calls for a stronger market in the opposite direction. You can see the gap up at 2,500 on the right of the chart above. Off it goes, and so far, price has not revisited this low.

Now let's put this chart in larger context.

ES Futures - 4 Hr - Flat in Context

So, the flat wave in the first chart, above, is minute wave ((ii)) of the Minor A wave above. The gap up is in the third wave. If the flat is wave ((ii)), then the running triangle is wave minute ((iv)) for alternation. After the fifth wave up of Minor A, then it appears we have three waves down as (c) = 2.618 x (a) with dead-on Fibonacci ratios.

And since that time, we have had three waves up. The waves are currently unlabeled. Could these three waves end here? Yes, they could to start a multiple zigzag lower. But, if there is a gap up Sunday night, then they could also continue back to the high, or near to the high (90% by EW 'rule') to make the minute ((b)) wave of a FLAT wave, to be followed by a likely minute ((c)) wave down to end Minor B.

Such a flat wave could go over the top and even make an expanded flat lower, to give the down wave more time and more length than the current 23% retrace.

The market knows were watching, and it is dragging things out in the correction as much as possible. That's what corrections do. It is interesting that the EWO is about as flat as a pancake here. Is it possible the market is getting ready to do another one of its most frustrating tricks?

Have a good start to your weekend.

TraderJoe