5th Wave Seems To Be In Progress
By
Avi Gilburt
As I was surmising of late, the rally off wave iv really seemed too small to mark a full 5th wave in this structure off the recent low. And, as I am writing this update now, it seems that we are now in wave (iii) of wave v, but it is taking shape as an ending diagonal due to the obvious overlap we are seeing in the futures structure.
Normally, the 3rd wave in a diagonal targets the 1.236 extension of waves (i)(ii), which, in this case, is the 7309ES region, as you can see on the attached 15-minute ES chart. Thereafter we see a wave (iv) pullback which most often overlaps into wave (i) territory, followed by a wave (v) which commonly targets the 1.618 or 1.764 extensions of waves (i)(ii). In this case, we have a 3.00 extension of the larger degree waves i-ii overlapping exactly at the smaller degree 1.764 extension in the 7385ES region, so that seems to be the most likely target in the coming days.
Of course, if the market were to reverse below the early morning low in ES, this structure would be invalidated. But, as long as we remain over that low, this seems to be the path for the market in the coming days.
And, once this 5th wave ends, then we will be facing a MAJOR test for the market in the weeks to count, as outlined on the daily chart, and in many prior updates.
