Market Taking the Long Road Down?
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Today, the market turned higher after testing last week's lows at yesterday's close, following the purple path that I laid out in yesterday's update. We are currently still trading under the resistance zone for that path on what remains corrective wave action off last week's low. So, as long as we continue to hold under that resistance zone, my base case will remain that we see this resolve lower to fill out a larger ABC pattern off the highs.
If the market is able to break through resistance and move back over last week's high, it would open the door for a more immediately bullish resolution. However, based on the current structure, the more probable outcome is still for this to resolve lower.
As shown on the ES chart, overhead resistance remains in the 7551-7594 zone, and as long as we continue to hold under this zone, my base case is that we are working on a wave 2 of the larger wave (c) down. Under this scenario, I would expect wave 3 of (c) to begin from this region. We will need a full five-wave move to the downside, followed by a break under the 7504 level, to give us initial confirmation that we have begun wave 3 down, with further confirmation coming from a break of the 7470 low that was struck yesterday.
If we manage to move back over the 7594 level and follow that up with a break back over the 7633 level, then it would open the door for this to be following the more immediately bullish yellow count. However, we would still need to see a sustained break over the 7703 level to further confirm that we are indeed following this path. For now, and as long as we continue to hold under resistance, I am giving the benefit of the doubt to the white count, which from an Elliott Wave perspective, has the higher probability of playing out.
