By and For the Machines

Three-touch trend lines can better help describe the market movements as they are a little more reliable than two-touch ones. The chart below is of the ES 1-Hr futures. Note that with nearly 120 candles on the hourly chart, one can see the pattern of the dominant trend lines.

ES Futures - Hourly - Expanding Wedge

One can't help but note that the dominant pattern is that of an expanding wedge - at least in the futures. This "grind-and-drop", "grind and drop" to yesterday's intraday low is followed by a "grind & pop" and "grind & pop" higher to the futures after-hours high today. In my experience this pattern makes it extremely difficult for a human trader to gauge. That is probably its purpose.

Note, too, MSFT and Alphabet earning's candle. At nearly exactly 4 pm there was a large machine-driven pop on the earnings, followed by a drop back down to where the candle opened - tough on human nerves. The machines don't care. 

Still, from the standpoint of The Eight-Fold-Path Method, a fourth wave (minute-iv, circle-iv) remains just barely in range. 

The bulls will likely have to recover the earnings candle and make further daily higher highs to be convincing that the down trend is concluded.

Price remains under the 18-day SMA, so the bias remains lower. Price is still scraping along the 200-day SMA, and the daily slow stochastic remains in over-sold territory without embedding yet. The conditions are tough as the over-sold condition is not yet attracting a lot of new money. Consequently, the machines hunt for orders wherever they find them, start-stop, stop-start, grind-whip, whip-stop, whip-whip and little impulsivity shown. These conditions can be due to making a larger diagonal downward, although this segment may not be an overlapping diagonal itself - just part of one.

Have an excellent start to the evening,

TraderJoe