Staying Alive - Market Analysis for Sep 29th, 2020

The title to this update is in reference to the yellow count we have been tracking. While it is clearly not my favored, it is still in the running – at least for now.

You see, the market dropped right down to the .618 retracement level of the alternative wave [1] of [iii] in yellow, and has rallied off that support.  The question now is if the market can complete a 5-wave structure off that support or not.

At this point in time, a 5-wave structure would consider today’s pullback a wave [iv] off last weeks low.  And, if the market can set up to make a higher high over the 3364ES region, then we can count 5-waves off the low struck last week.  You can see this potential in yellow on the 5-minute ES chart.

However, if the market should break down below the 3300ES region before it is able to complete this 5-wave structure, it stabs a dagger into the heart of the yellow count.  The 3300ES region is what would be considered the .382 retracement of yellow wave [iii], and a break of that level makes it much less likely we are dealing with a 4th wave pullback. 

Now, even if we do see a 5-wave structure develop over the coming days, that does not mean the green count is out of the picture.  You see, the [a] wave can also be a 5-wave structure, although they are most commonly 3-wave structures. In fact, even in the yellow count, I do not think this 5-wave structure – if completed, will be large enough to be considered wave 1 of wave [3] of [iii], as shown on the 60-minute chart.  Rather, it may only be wave i of 1. 

Ultimately, I think the market will be taking us higher in the coming weeks, even if we are stuck within the larger b-wave in green.  But, the micro path is still in question.  I think the next week to two weeks will likely provide us with a much stronger expectation between the yellow and green paths.  For now, I still view the green path as the primary count.

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