Not Easy

I have written often about what I called "The Fourth Wave Conundrum". That is the fact that there are approximately 13 different valid Elliott Wave patterns by which fourth & fifth waves can form starting with an initial three-waves-down. So, your odds of calling such a pattern by random chance are 1:13 or roughly 7 - 8%. Those are not great odds. Last night, the ES 2-Hr futures did not go over the prior high. That made life a little worse as it didn't rule out anything. And, this morning, price went down under what I previously referred to as the "Center Line" of a potential triangle. Here is the ES 2-Hr chart showing the center-line cross.

By crossing back under the center line, there is a potentially valid triangle forming - shown in green. If it does, so be it. It might be the last pattern before a fifth wave upward. But there are two things not to like about this triangle. First, the Ⓔ wave is forming nowhere near the apex of a triangle. Second, it currently looks somewhat impulsive.

Now, triangles can be elusive things and can get more complicated, so we must be calm and patient. But I also want to note that literally by the skin-of-its-teeth, the count can be the inverse of the triangle which is a diagonal down and a deep retrace shown as ①, ②. Personally, I'm not married to either count. A true knowledge of the odds simply won't let me be. 

The one thing that can be said, objectively, is that a contracting triangle invalidates below the Ⓐ wave.

Finally, it must be said that if prices go over the prior high again - which is certainly possible - then one cannot rule out an upwardly pointing diagonal - as the note in blue says - either. But we are not there, yet, at present. So, keep an open mind and let's see how this goes.

Have an excellent rest of the day,

TraderJoe