Suspicious Minds - 3

In the prior post on the ES September futures (front-month only) daily contract we showed the possibility of breaking up or down out of a triangle, upward, or an expanding diagonal, downward. The internals of those charts are shown below on the ES roll-over contract. This is the lead month prices stitched onto the prior expiry on the volume roll-over day in the 4-Hr timeframe.

The panel on the left shows the 15 June high as a :5, the fifth wave of the Minor C wave. That high truly is a higher all-time-high on the rollover - just not on the lead month contract when considered alone. And that high's rather impulsive look suggests it could be the fifth wave after a fourth wave flat.

If so, we may be getting an expanding diagonal downward with the remaining sequences. 

Still, The Principle of Equivalence says we should at least give roughly equal consideration to the equal and opposite pattern of a possible fourth wave triangle that is wasting a lot of time before making that final high. We haven't seen a real triangle in the Minor C wave, yet, so, yes, this could be the one.

As an Elliott analyst one has to be agnostic about the outcome until certain benchmarks are achieved such as either a new all-time high or a lower low than the 10 June low. As a trader, the job is to try to put the odds on one's side. For example, a current contraindication of price going down is that it is still closing above the 18-day SMA, and so the daily bias remains up until it does no longer. Whereas, from an Elliott perspective, if the peak on 15 June is 'actually' a five-wave sequence, then it has no business inside of a triangle pattern, which must be all three-wave sequences.

So, for example, in the triangle count it is still possible to make a lower low than the prior wave low and still be inside the triangle unless the Ⓒ wave is exceeded lower. Even, then, it might be possible to extend the triangle by dropping the lower trend line a bit, so long as the Ⓐ wave is not exceeded lower. This would make the triangle possibility extended in time by several days.

Of course, once the Ⓐ wave is exceeded lower one is well on-the-way to knowing that the diagonal is likely completing. And after the diagonal completes a pretty still retrace stiff might be expected.

This is just the market's inevitable way of having its say and not letting the profit possibility be one-sided.

So, it is still a time to be patient, calm and especially flexible. The market - as a whole - will speak, and things will become clearer. They always have and likely will continue.

Have an excellent rest of the weekend.

TraderJoe