Price movement was whippy for the futures session. Overnight, the futures were much higher, right until the cash session open. They were were sold from that point, and the selling continued for the remainder of the day with a large mid-way internal failure swing. The cash session was not all that great, but in the after hours until settlement, they really began just "throwing them away", with the futures losing nearly 20 points in 15 minutes time. All this occurred with the cash market closed. Interesting, huh? The hourly chart of the futures is below.
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| ES Futures - 1 Hr - Truncation Averted |
Today's price action created an outside day lower. Price settled below the 18-day SMA so the price bias is, at least for now, changed to lower. The selling into the settlement finally allowed the 16 June down wave to be exceeded. If this is a correction, then that movement averted a truncation in the correction.
The chart above shows the major Fibonacci levels of a correction. So, depending on Sunday's overnight session into Monday, flexibility is still needed to see if a correction holds or not. Price might be trying to seek the daily up trend line from the lows. Readers of this blog should plot that up trend line to see how far price is away from it now.
This has really been a range-bound and volatile several days - the likes of which you may seldom come across. Last night's price movement made a pretty clear "three waves up in a channel" - including the triangle we pointed out yesterday - and this would be an odd way to end an entire movement. In Elliott wave terms, this pattern, so far, can be called a "double-three" or a "double-combination". And, if this is a correction, and if the correction extends lower - say to the 50 - 78% Fibonacci retracement zones - then it is possible to form the combination called a "flat-x-zigzag". They are fairly rare, but I have seen them. So, caution, calm and a lot of flexibility are required to avoid being whipsawed.
Have a good start to your evening and to your weekend.
TraderJoe
The 'rule' for wave four in an impulse is that it may not overlap wave one. The figures given in The Eight Fold Path Method are for the most typical cases based on computer studies of past waves (this includes the EWO percentages). So, beyond 50% of wave three is a significant 'warning' that wave four might invalidate. It is not the 'rule'. Only overlap is the 'rule'.
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