Further into the target zone & confluence

Last night and today, stock futures as measured by the ES E-mini futures continued higher to the level of 4,260.50 and then began to fall off. During the day I showed this daily chart, below of what are likely the relevant (Fibonacci and other) confluence areas on the chart with the commentary below.

Good morning. Price is approaching the following Fibonacci confluence areas.

1. 62% retrace of prior wave (common for diagonal waves; can go further).
2. 1.618 extension of ((a)) wave.
3. Prior S&P cash gap.
4. Fibonacci days 34 + 4 (experiment).
5. (Non-Fibonacci) upper daily Bollinger Band 4,266 (today).

With price having just exceeded 4,253 during the day - chart was not the full day's move - the 62% retrace level on the prior wave was tagged and exceeded slightly. This is a typical level for wave four in an expanding diagonal. Having done that we started looking for a potential turn-around and counted a first five-waves-down, and we showed that. Now the question is this: "have we topped?" We suggested that if we haven't topped the down move has gone sufficiently low as to overlap prior upward waves, and this might mean we are making a contracting ending diagonal fifth wave. But, we also showed an alternate that we might have topped.

The alternate comes from this chart in the ES futures - which includes overnight waves not seen in cash.

ES Futures - 30 Min - Overnight Waves

The big, big question is whether that first wave up is enough to have started the wave sequence, and it never, ever shows up in cash although part of wave ii does. I am inclined to call it a truncation to the wave ii position, partially based on degree labeling, and that would make the wave sequence up just three-waves meaning, with the overlap, we could be in for an ending diagonal. Neely has documented a drawing of such a "tiny" lead-off wave in his book, Mastering Elliott Wave, but I have seen so few cases that I must keep an open mind, be flexible and count accordingly. Still, I have to ask, "why is that wave there, and why does a channel fit so nicely?"

One small issue with an ending diagonal is that it might take days to grind out yet, and that would mean this wave was not ending very near 34 trading days. Something to ponder.

Have a good start to the evening,

TraderJoe