The 'Exact' Number

As we were discussing on Friday, the market has not yet disproved the case for the (e) wave of a fourth wave triangle. I doubt few other analysts will tell you this, but I will provide you with the 'exact' number to disprove a different case. The ES 4-hr chart is below. 

ES Futures - 4 Hr - Exact Number

I'm showing you one upward Fibonacci ruler for a reason. But first, I want to speak about a different measurement - which readers of this blog should confirm for themselves - that's why I'm not showing it. That measurement is that the second down wave labeled, i, is just pips shorter than the first down wave labeled (i), So, by degree labeling, the second down wave could either be "c" of a-b-c down that we have showed before - because the two waves are similar in length - and this would make up the (e) wave of the triangle, Orrrrrr, the second down wave can be a sub-wave of a larger wave (iii), down, yet to follow.

What few others won't tell you - because they don't follow degree labeling to the extent they should - is that there is an exact measurement that likely voids the nested (i), (ii), i, ii down count. And very, very coincidentally, that number is ES 7,500.00 to the tee. The market stopped just short of there on Friday's up move. Why did it do that? Is it nesting for a third wave? Well, this is certainly plausible. It is not at all proven. The pattern needs downward length to activate it. It might get it. It might not. The odds in the absence of knowing what the weekend news will be are pretty close to neutral - maybe 45 : 55 upside to downside, and that slight tilt downward is largely because price is still below the 18-day SMA, with a downward swing-line indicator at the moment.

So, to make it clear, trading above 7,500.00 in the ES Sep futures likely voids the nested down count because wave ii would become longer than wave (ii) in price length and would likely run afoul of degree definitions. And, trading above 7,500 would likely put the (e) wave of the triangle back on the table at the lows.

So, with only a smaller degree a-b-c up that we labeled on Friday afternoon, how would we make a fifth wave up out the (e) wave of the triangle? It would likely have to start with a larger diagonal, and not take out the prior lows.

Alternatively, taking out the lows of Thursday/Friday in the overnight Sunday or Monday would be more indicative of the larger downward movement because that would rule out Friday's upward smaller degree a-b-c from becoming a larger diagonal.

The market is giving us some clues to work with - some crumbs to follow - as awful as the wave counting and trading currently is.

Have an excellent rest of the weekend,

TraderJoe