Big Picture Reminder

The ES 2-weekly chart is below with a reminder of what can be the big picture: we may be forming a 3-3-3-3-3 Contracting Ending Diagonal at Primary Degree.

ES Futures - 2 WK Close - Potential Contracting Diagonal at Primary Degree

Note that with 106 2-weekly candles on this chart, the Elliott Wave Oscillator diverges where it should. It is often the case that wave (4) will try to come down to undercut the rising trend line to set traders in the wrong direction before the turn for Intermediate (5), higher. In the process the EWO might come back down to the region of +10% to -40% of wave (3).

This count sets a specific invalidation in that price should not go over the current all time high before overlap with wave Intermediate (1) occurs. The overlap is expected in this case. Further, the lengths of the wave structure should be (5) < (3) < (1), (4) < (2) with (4) overlapping (1) without traveling below the low of wave (2).

Why? Because often a diagonal pattern signals that a market that has gone too far, too fast, and is near the end of a longer-term wave. And Primary ⑤ - if it forms properly - would be the end of a Cycle V wave.

Have an excellent rest of the weekend,

TraderJoe