The Night Desk Does it Again

Below is the daily chart of the ES futures. Today made an outside day up. The morning started with lower lows that attacked both the 100-day SMA (green crosses), and the lower daily Bollinger Band. We said price could find some short-term support at that location. It did.

What was interesting to me was the time the rally started. If you are a cash session trader, it looks to you like the rally started within a bar or two after the open. It didn't. Overnight, there was a lower futures low on the day. The lowest price in the ES futures was again around 3 AM - when someone or some machine is working the night desk.  There were no lower prices in the futures, and it was an all-choppy morning rally from there until a veritable impulsion of prices in the mid-to-late afternoon.

We were fortunate to count the diagonal rally, a retrace, and get some/most of the third wave up correct. The thrust continued into the last half-hour and the current wave looks like a smaller degree third wave, with possibly the smaller degree fourth wave beginning. Those of you interested in how we counted the intraday, and the rationale, can review the comments in the prior post. It really was fascinating.

So now there is an outside day up, which is below the 18-day SMA. It is to be respected with the caveat that "if the low of an outside day up is undercut within two days, it can constitute a trap for the bulls." Remember, the daily bias is still down, and the daily slow stochastic (regular calculation) is still embedded.

From an Elliott Wave perspective, this wave seems like it is indeed the Ⓒ wave up of wave iv on the ES 4-Hr chart in yesterday's post. It might retrace 38 - 50% of wave iii. As an exercise, readers of this blog should do the measurements in terms of points, and look for where such a wave count would work, and where it wouldn't. For information the Ⓑ wave external retrace measured 1.236 times the Ⓐ wave, well within the normal parameters for a Flat wave.

Have an excellent start to the evening.

TraderJoe