Market Still Hovering Near Recent Highs – Patience Remains Key
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The market continued to consolidate near the highs established yesterday, with price action still holding well above even our uppermost support levels on the ES chart. As such, from a smaller-degree perspective, we do not yet have any confirmed signal that a local top has been struck.
From a larger-degree standpoint, however, the wave count is becoming increasingly stretched in this region and we are also quite extended from a Fibonacci perspective. While confirmation of a top will require a sustained break of key support, this extended pattern keeps me cautious in this region.
Zooming into the ES chart, I’m currently showing upper support in the 5902–5876 zone. A break of this support on the smaller timeframes would be the first indication that a local top in wave 5 may be in place. Conversely, if this region holds and price pushes higher, I would count that move as wave (v) of 5 of c of v.
A break below 5876 would offer an early warning that the top in wave 5 may be in. However, for confirmation of a larger degree top, we’d still need to see follow-through to the downside with a break below the 5776 region.
At that point, our focus would shift to the structure of the initial move down. The nature of that decline will be key in helping us determine whether we are heading directly beneath the April lows or instead setting up for a more complex correction, such as those outlined in the yellow and blue counts discussed in prior updates.
Until we see a break below these critical support levels, the market remains in an extended but unresolved state. I’ll continue to approach this region with caution and vigilance as we await confirmation that a top has been struck.
