Further into the target zone

Today's more benign CPI report provided the best reason for a fifth wave, and it got prices further into the target zone shown previously, and closer to ((c)) = 1.618 x ((a)), as in the ES daily wave chart, below.

ES Futures - Daily - Wave Chart of Potential Expanding Diagonal Lower

After the initial five-minute post-report bars (which occurred while the cash markets were closed) and saw ES futures prices rise virtually from 4,130 to 4,200, prices gave back about 20 points, then made a new high at 4,212, then gave back about 17 points and made another marginal new high.

While the post-opening waves can be watched for signs of either another flat, running triangle or even an ending diagonal, we maintain that from a wave-counting viewpoint, not much of interest happens until there is a clear five-waves-down of some significance and a retrace that does not go over the high.

If we are in the expanding diagonal pattern above (and it still must prove itself) then the fourth waves can be plain testy until they are not. We are happy to note in today's chart, above, that there is now clear overlap between wave Minor 4 and wave Minor 1. We also note there is one whale of a divergence going on between today's high and MACD on the ES 4-hr chart, and this often indicates a fifth wave in progress. Lastly, we'll note that the angle of incline of the minute ((c)) wave, above, is less than that of minute ((a)) wave.

On the above chart, the top trend line is tentative. It may need to be adjusted for the actual ending location of the Minor 4 wave when that become more apparent. 

Tomorrow morning is the companion PPI report, and it will be of interest, as well.

Have an excellent start to the evening.

TraderJoe