Why the Nested Count Still Works

The daily chart of the NQ lead contract is below. When we attempt to use The Eight-Fold-Path Method on the daily chart, we find there are only 71 candles (as shown) which is insufficient to be in the range of the 120 - 160 candles needed. But we note that the EWO is on its lowest point, as shown.

NQ Lead Contract Futures - Daily - Nested Count

Because there is no divergence yet, this suggests additional price movement lower is possible. To get 142 candles, you can try the trick of using a 12-hour chart, but the EWO in that case remains on the lows. (Try it!) So, there is no difference in interpretation at this point.

In yesterday's post, we suggested that there is yet to be seen a "kick-off" or a "climatic" pulse lower. IF that were to occur, it would break the "base channel" of one's & two's lower and be a first confirming sign of a third wave. This base channel is also shown above. It is Elliott's preliminary channeling technique.

Next, we note that if this symbol, ⓘ, is for minute-i, down, circle-i, then the first sub-wave of minute-iii, circle-iii, is minuet wave (i). And we note that minuet (i) is shorter in price and time than ⓘ. Further, minuet (ii) is shorter in price and time than minute-ii, circle-ii. So degree labeling definitions are currently being followed. The same is the case in the ES futures. And it is possible for minute-iii, circle-iii to extend by smaller degree extensions.

Please remember when viewing these charts, that in the rollover contract, there is a higher high as shown at the (y) wave high on the above chart. And that is the same in the ES futures. And it turns out that this difference between the lead month contract and the rollover contract matters not for the nested count. The degree definitions still hold. Note in the ES I think the (i) ended just before the expanded flat wave (ii) - which a lot of sites are calling a fourth wave.

For the moment, we know the other count that works is the expanding diagonal. But again, we don't know that downward movement in this wave is over. So why, overall, are we counting as minute-i, ⓘ, down to Minor 1? Let's have a look at the weekly chart, below.

ES Futures - Weekly - Degree Labels Lower

As the chart shows, as long as downward price remains shorter in price and time than the prior larger degree wave in the downward direction, which is Intermediate (A)/(1) based on previous criteria, then the new down wave may be counted as the one lower degree or Minor 1. And its visible sub-waves are the minute degree components. 

Let's see how the week progresses and whether further impulse is experienced - which is certainly possible - or whether a diagonal retraces.

This is the second post this weekend, and if you haven't read the first one yet, you may wish to read it now. Have an excellent rest of the weekend.

TraderJoe