And the answer is ...!

It is disconcerting sometimes when you write a blog and try to figure out who puts their thinking caps on and who does not. For those of you who responded to yesterday's inquiry, they were appreciated, so don't think the above comment applies to you. You on the other hand stretched and tried to find something of value to contribute to the blog, and that is appreciated. But now, what I understand to be the true and correct answer must be provided, and I hope it gets you to thinking in a slightly different way. The answer appears in mathematically succinct form on the chart revision, and again below the chart.

There are no assumptions in this answer. It is first precisely true that buying and selling are actions that require either human or machine input. There is no other way to do it that I know of.

But further, the only way that the up fractal (that high near 417 on 2 Feb) could be made is if the buyers estimate that at any price beyond there, within their time horizon, the Buyers' Estimate of the Probability of Success falls to 0, or as infinitely close to zero as is possible. This is given the mathematically precise symbology of BePs == > 0. If there are no buyers, price simply can not be pushed higher because sellers have no one to execute a transaction with.

Then, at the down fractal (which started at the low of the day on 3 Feb) similarly the Sellers must have Estimated that their probability of success had fallen to a level approaching as close to zero as is possible.  This is given the mathematically precise symbology of SePs == > 0.

Now again, buyers and sellers can be humans or machines. And there are many, many ways and methods one might use to estimate probability of success. Let's take a couple of example cases.

Example 1 - Relatively trivial

At the up fractal, buyers realize it is only 15 seconds to market closing time, and there is what is perceived to be a huge economic report coming out the next day. Buyer decides he/she/it will place no more cash trades that day because in his time horizon the probability of success drops to near zero. Buyer is estimating based on 1) time, and 2) fear of what the report reaction might be. This deprives sellers of anyone to sell too. BePs == > 0.

Example 2 - Less Trivial

At the down fractal, sellers realize that a big economic report has just come out AND there is a huge, yawning gap in the chart. Sellers estimate that the gap might fill, and their estimate of their probability of success for further selling is getting low saying things like, "temporarily, at least, most of the meat has been taken out of this decline, and it could be a trap. I'd better lighten up on my sales and think about reversing." This deprives the market of anything but buyers, and price rises. SePs == > 0.

Again, again, again  there are many ways buyers and sellers can estimate their probability of success.

For example, some people might use their gut, and say, "I think my chances are good here. I'll buy". Other people might use Bollinger Bands to derive an estimate. Machines might use their knowledge of volume and how many positions are in the market on a particular side to make their estimate. Another person might use an RSI indicator and say, "the market is over-bought here, I'll sell." Another person might use a MACD & a trend line and say, "the market is over-sold here, and the trend line broke to the upside, I'll buy on a pullback". Another person might say, "Define the risk and the reward, and always take a profit at 1.5 times the risk." Yet another person might say, "you know what, every action has an equal and opposite reaction. So, if there's a sell-off, I'll wait for a big rebound before selling."

This is the way it happens. This is the definitive answer to the question, as best as I can tell. There is nothing else to it: all day long (and in the case of the futures, all night, too) buyers and sellers, whether they be machines or humans, are estimating their probability of success and placing orders in the market based on that estimate. The manipulators that others referred to in their relatively good answer, just estimate that their probability of success is very good based on a lot of factors, but probably their size, and what they could withstand in the way of losses, or their ability to use machines for speed, etc.

The Elliott Wave Principle is just another way to estimate those probabilities, and can be used alone (not too recommended) or with other factors. But, the bottom line: somehow you will estimate your probability of success in buying or selling using whatever emotions or information you chose or are exposed to, and you will place your orders - or not - in the market based on that judgement. The machines will do the very same (probably excluding the emotions part).

Think it over. Does it make sense? How good are your estimates of this probability? Something to chew on.

Have an excellent rest of the evening.

TraderJoe