NQ Qualifies for Expanding Diagonal

In the after-hours tonight, the NQ1! (roll-over) futures have traded below the 14,412-level needed make a fifth wave longer in price than a third wave. Thus, from the daily chart below, a five-wave-down expanding diagonal structure may be drawn as follows.

NQ (Rollover) Futures - Daily - Qualifies for Expanding Diagonal

This possibility was shown back on Oct 21st in the post entitled, "Will it Activate?", that you can view at this LINK. We had previously stated that just the lead month contract NQZ2023 had already qualified for the diagonal. Readers are quite lucky to see such a chart as this one occurs on the daily timeframe and currently meets all the Elliott Wave rules and guidelines for such a structure. This one occurs in 66 daily candles.

Now that the diagonal has activated, there are a Fibonacci three questions to answer. They are these:

1. Will the fifth wave, circle-v extend to 1.618 x circle-iii as it certainly could?
2. Is the current down wave since 12 Oct all of (c) of circle-v, or is it just wave i of (c) of circle-v?
3. When the diagonal is completed, how deep will be the retracing wave?

As to the last question - if the entire diagonal, the five circled waves shown - is Minor 1, down, the retrace of the diagonal would be Minor 2, up, when it occurs.

Remember, as we showed with the hourly Dow example in the comments for prior posts, a completed diagonal can always convert to a full-on impulse wave just by adding more & more wave sequences, downward in this case, to create a second, third and non-overlapping fourth wave. There is no 'rule' regarding retrace amounts of diagonals, just guidelines.

We hope to say more about the actual counts on the weekend. For the moment, recall that price is still below the 18-day SMA so the bias remains lower, but the lower daily Bollinger Band has been hit again and the daily slow stochastic is still in just over-sold condition and not embedded yet. So again, some of the Smart Money may be taking some profits here, and it will be interesting to see if/when price tries to regain the 18-day SMA for a reset to more neutral conditions, or if price "latches on to" the lower Bollinger Band for a time in the future.

Lastly, if the diagonal should not be correct for some reason, it may be possible to start a nested impulse count. I'm not adverse to that count but am just looking for good rationale for it in the wave sequence. One item that it has in its favor is the possibility of making a "base-channel" lower. We'll explore that more this weekend.

Have an excellent start to your evening,

TraderJoe