Stuck in the middle with You

Yesterday we saw the likelihood of a battle brewing at the 18-day SMA. Today prices again approached the "line in the sand", missed it by three points, and were rejected lower. In doing so, first, the five-wave up scenario from yesterday was completed with a marginal new high.

ES Futures - Daily - Rejection near 18-day SMA

The daily slow stochastic is still over-sold, and it is possible for price to tag the lower Bollinger Band, again, but not certain. Here is the ES 30-minute chart to show two things: first price did first nick out the higher high to complete the impulse, upward.

ES Futures - 30 Minutes - Impulse Up Completed

 

The second thing is to show that after making the marginal higher high, price then headed quickly lower - quickly relative to the time taken in the up wave. On the down side of the chart above, price has exceeded the 62% retracement level, but has not taken out the 78.6% retracement level just yet. Here is a chart of the ES futures 5-minutes to show the current possible structure of the down wave.

ES Futures - 5 min - Possible Impulse

At the moment, we say we are "stuck in the middle" because there is no confirmation of prices below the 30-minute low of 3,295. And, on the 5-minute chart, there is no confirmation of a full impulse lower - although it is certainly possible that one could complete overnight and into tomorrow morning.

In the above chart, the RSI, on a very short term basis, definitely has the classic signature of "the third of a third" wave, with the lowest reading below the 30 level (colored circle).

So, we need to see if a fourth wave ((4)) forms without busting the pattern, and if there is any alternation to the pattern. So far, it looks OK, but it needs to hold through the overnight. Readers will note this impulse would be counted with a failed second wave that would indicate a lot of weakness in the market if the impulse plays out. If it doesn't, it is possible to consider an expanding diagonal wave lower.

GOLD appears to be in the (d) wave of its triangle, with five waves up for 'a', then 'b' down' and it could make five more waves up to tag the upper triangle trend line.

Have an excellent start to your evening.

TraderJoe