Sell-off Accelerates

Yesterday, we showed the possibilities for a triple zigzag, or expanding diagonal downward on the ES 15-minute chart. Today, the sell-off accelerated after the second (x) wave or wave (4) holding below the required level. Here is the updated chart on the 30-minute time frame to permit more bars. In this case, the term 'wave (4)' is the Submicro wave degree, not the Intermediate degree.

ES Futures - 30 minutes - Expanding Pattern

 

Wave (4) held below the level of wave (2), and took more time and more price than wave (2) did. Then, as the selling got more pronounced, the low of wave (y) or (3) was exceeded lower and a larger move - in terms of price - was made than wave (3). 

So now the down move has enough price length for a diagonal, but as a diagonal, wave (5) is shorter in time than wave (3). Further, today's down wave can be counted as a 'five'. That means it could just be the A wave (this is Minuscule A, not Minor A). A 'B' wave could head back up towards or over the ESA-34 shown.

Note that with about 112 bars on the chart, the Elliott Wave Oscillator shows the expanding pattern which does typically represent the expanding diagonal. 

With respect to another pattern I was following today, the Russell 2000 futures made a contracting wedge - which may be an ending diagonal (c) wave - after the futures had made the 90% Fibonacci retracement level shown on the chart below.

Russell 2000 (RTY) Futures - 4 Hr - Contracting Diagonal?

 

The pattern does suggest that if the diagonal is a valid one, that the low of the (b) wave should be exceeded lower in less time than the diagonal took to build. For those interested, today's down wave is already longer than wave ii by a few pips, and therefore, a larger diagonal can not be built at this time.

Have an excellent start to the evening.

TraderJoe