On the daily chart of the ES futures, yesterday we said price was in a risky area for new naked shorts based on the position of price relative to the lower daily Bollinger Band, and the daily slow stochastic being in over-sold territory. Today illustrates why that guideline exists. Whether just a 'snap-back rally' or heading toward a reversal of the daily down trend, prices headed higher and stayed there most of the day. This price action, with a higher high, also - at least temporarily - reversed the swing-line indicator to the upward direction as shown below.
Perhaps the objective is to fill the yawning cash gap left on the SPY index, or perhaps it is to fill the overnight futures gap shown above as the red circle. In either case, price has overlapped upward (overlap warning L#1). And what remains to be seen is whether the two up (green) fractals at the high hold or break. As of this time price has not yet recaptured the 18-day SMA on the upside (see yesterday's chart).
If both of the up (green) fractals break it will end the down trend temporarily. Based on the length of time of the 3rd wave to the September high, we said this wave down could be the 'c' wave of a Flat and showed the possibility of red wave 4 at a non-overlapping location.
One of the difficulties of counting Elliott Waves is one often has to wait for a wave that does not go over a local high, and then wait for a wave that breaks a recent low. This is all part of The Fourth Wave Conundrum that happens at every degree of trend.
Let's see what information the election results and the FED meeting, reported on Thursday this week instead of Wednesday, delayed because of the election, provide.
Have an excellent rest of the evening,
TraderJoe
Tj. Wasn't markets expecting the election result?
ReplyDeleteThe financial markets tend to dislike uncertainty.
DeleteThe election result removes some uncertainty, which can be interpreted as "bullish".
Plus we are in the right place in the Elliott Wave pattern for a 5th wave up. 😉
bloomberg terminal had harris winning, and not control of both houses.
DeleteMost of the polls were propaganda. Nate Silver pointed out the fraud.
Deleteits pretty simple. if you think we have a nested count you get yellow path. Elliot wave not good at calling tops its better at identifying trends. EWO longer term in my opinion supports yellow. White has invalidation levels above, yellow has invalidation levels below.
ReplyDeletehttps://postimg.cc/p5Ps8RRg
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Deleteisland reversal on spy = iii/(iii)/3 , which is where it would belong
DeleteHow do you know 1 isn't 3 and we are in an extended fifth wave?
Deletethen 3 is the shortest wave, 1 beagn in 2009, 2 ended at covid low
DeleteSorry, there is no time scale on your chart.
DeleteA lot of EW traders missed out on these big moves because of all the top suggestions with that methodology.
ReplyDelete