May See A Change Of Plans


With the way the market is reacting today, there is an alternative I have to bring to your attention.  

While I was initially viewing the market as having the potential to extend towards the 5900SPX region for the potential wave [1] in the more bullish green count, or the wave V in the yellow topping wave count, the structure we have experienced today may be providing for a topping a bit sooner and lower.

Just to remind you, the more bullish path I was tracking is presented on the 5-minute ES chart, and suggests that as long as we hold today’s low, then I am looking up to the 5861ES region for wave 3 of [iii] of iii of [1], which would then make the pivot our new support should we get there in a more direct fashion.   Ultimately, this pattern would be pointing us to the 5900SPX region.

However, due to the manner in which the market is acting today, I have to now bring your attention to the potential that the rally which began off the 5674SPX level is actually taking shape as a diagonal.  I have presented that path on the 5-minute SPX chart, and it would become highly likely should we see a sustained break-down below today’s low.  Such a break-down would be wave iv in the diagonal, and I have added the target for this diagonal in the blue box in the 5813-5844SPX region.

But, this also means we will have potential for the market to be striking a major top a bit sooner, as the wave V potential drops back down to the original target we set weeks ago in the 5840SPX region.  The question will be if we see a corrective pullback that holds over 5674SPX or not after we complete this rally.  Should we see a corrective pullback that holds over that support, and the market then provides us with a 5-wave rally off that corrective wave [2] pullback, then we are going to be targeting 6000+ in the coming month or two.  

However, if the market breaks down below 5674SPX after completing this rally then that is our first signal that a major top has potentially been struck.   So, clearly, you need to have this consideration in your mind as you consider your positioning in the coming weeks.

5minES
5minES
5minSPX
5minSPX
60-minSPX
60-minSPX
Avi Gilburt is founder of ElliottWaveTrader.net.


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