Expanding Diagonal Definitely Validated

The ES 2-Hr chart is below. The potential expanding diagonal we have been discussing today has definitely validated. The only question remaining is whether it is complete. It could be, and there is a scenario by which it is not yet completed. First, here is the chart.

ES Futures - 2 Hr - Expanding Diagonal Validated

As you can see from the Fibonacci ruler, wave (5) has become longer in both price and time than wave (3), and the way it can be considered as complete is if yesterday morning's low was a 'failure b wave'. We discussed this in the comments for the prior post. The pattern will have done its job, and there are five-waves-up after yesterday's low.

IF the pattern is not complete, then a running triangle could form above 4,148 and a higher high would lie ahead. The market may be waiting on some news or earnings to provide a backdrop for a decline. 

However, in no instance could a low be made below wave (4) at 4,110 before a new high and the pattern not have ended. Said another way, "a low below 4,110 would confirm the end of pattern".

It gives me great pleasure for readers of this blog to actually have been able to see this pattern demonstrated and for at least two of us here to have agreed upon it. Again, the expanding diagonal is one of the rarest of patterns, and it is not all that often that people get to see them constructed by the rules. Because they are so rare, they should not always be expected at the end of every pattern. The contracting diagonal is a more common ending pattern. However, if this pattern is correct, since it is the 3-3-3-3-3 variety then it is expected to end a pattern.

Please keep in mind that this pattern is not exactly the expanding megaphone pattern that others often refer to. That is usually the expanding triangle pattern, which is different, and has different implications.

Now we'll see if, when & how this plays out.

Have an excellent start to your evening,

TraderJoe