Potential Revision to Diagonal Count

There appear to be enough waves in the count, and still sufficient upward overlap to make this revision to the ES / SPX potential diagonal lower, here shown in the two-hour S&P500 cash index.

 

There is still a long way to go to prove out a count like this - in which the waves must form properly, so we'll take it one step at a time, remaining flexible and open-minded.

This material was added after the new session began. Diagonals can be tricky. I get that. That is why I have decided to 'play this one forward' on the site with the clear caveat that a diagonal must prove itself. IF the diagonal plays out, then the wave 5 'must be' longer than the wave 3. See chart below which is of the ES 4-Hr futures.

ES Futures - 4 Hr - Wave 5 Must Be Longer than 3 in Price

Again, IFF a diagonal is to play out, then wave 5 'must be' longer than wave 3. Thus, this forms a clear Target # 1 in the diagram, above. 'Usually' (most-often) the minute ((a)) wave will take a stab at the prior low to show its character as a Motive Wave. Remember, by the principles of degree labeling, wave minute ((a)), if it is to be a sub-wave, should not be longer than all of Minor 3. 

Then, there would be a minute ((b)) retrace which would be 'entirely up for grabs'. I have seen them be very long and touch the upper down-trend line. I have seen them we very short, or be a triangle, and then just break loose into the minute ((c)) wave - fooling a lot of us in the process. Here, the only restriction is that minute ((b)), again by degree labeling, should be shorter in price and time than all of Minor 4.

As long as all of Minor 5 is longer than Minor 3, the wave is in good shape. It may come out near 4,000. It could go lower. Sometimes Target # 2 is near the Wave 3 x 1.618 level. So, don't be surprised if it is. Again, this is all supposing five waves down to minute ((a)) form as they should.

Have a good rest of the day.

TraderJoe