Wave v occurred on schedule, too

After some slight overnight lower lows in the ES 2-Hr futures, and then an reversal, ES prices opened with a gap up and nudged out a slightly higher high to the 3,950 level. This, as we suggested yesterday, was wave v. The gap was an exhaustion gap up. And after the open prices reversed, filled the gap and kept on going lower. The ES 2-Hr chart is continued below.

ES Futures - 2 Hr - Minute ((ii)) likely

The extent of the move up - as best I can tell - is (c) = 1.382 x (a). Note that even though wave 'a' made a very deep retrace on the minuet (a) wave, the up wave could not make a 1.618 extension as would be expected in a true impulse wave. Further, given that we think the best count in the futures of the center section of the wave is as a minuet (b) triangle, we think this "ups the odds" of there only having been a zigzag upward. We note the RSI divergence both on the high of wave iv and on wave v.

The magenta lower parallel trend line has been broken lower in less time than wave v took to form (at least in the futures) and the down wave is larger than the 'a' wave of the (b) wave triangle - the largest prior down wave. This tends to indicate the degree has turned.

We were able to count 'five-down' to today's close with no degree violation, and have posted a :5 at today's low. Back-testing the lower parallel trend line is certainly an option. A lot of flopping around can go on as people head out on vacation or for celebrations and the volume gets even thinner. The algo's just love the light volume to find orders and stops.

Have a good start to the evening.

TraderJoe