Respecting Resistance, But May Not Be For Much Longer

As I wrote the in weekend update, as long as the market respects the 1.00 extension in ES around the 6680ES region, then we can consider this 5^th wave as completed.  That means that we “should” see the market turn down hard to signal a diagonal has completed before a break out through 6680ES.

However, this morning, the market ran up to that resistance, hit its head on that resistance a number of times, but has yet to indicate that a diagonal has completed.  It seems that the market is simply consolidating below resistance, which often means it is will attempt to break out through that resistance.

So, the parameters remain the same.  If the market is able to bust through that resistance and carry to the 1.236 extension in the 6719ES region, then that would likely mean this is wave iii in an even bigger ending diagonal.  I would then expect a drop back towards the support and an overlap with wave i at the top of the support box (which is typical of diagonals), followed by a rally to the wave v target overhead on the 15-minute ES chart.

Therefore, the market is at another inflection point.  And, we have our parameters to guide us in the coming weeks.

As I also noted in an alert in the trading room about the bigger picture on the 60-minute chart:

“However I slice up this chart, the HIGHEST likelihood is that we are in a 5th wave.  Does it extend to the top of the trend channel or not will be determined by whether we hold this resistance right now in ES.   But, however you count it, the most likely scenario is that it is a terminal 5th wave.”