And Yet More Corrective Action

All we have been getting is corrective action with lots of whipsaws to both ends of the tape.  In fact, the retracements on both sides have been much deeper than normally seen in standard moves.  But, remember, in both scenarios on the table, we are still either in an ending diagonal or a larger degree 4th wave taking us back down to the 1812-1819ES region, both of which move with corrective wave structures.

It is still hard for me to see a topping pattern as completed and in place, and any such pattern would be forced.  So, it will take a break down below 1812ES for me to consider a potential larger degree top as being in place.

For now, as long as the market maintains support over 1837ES, then we can still be in a wave iv triangle, with the d and e waves yet to complete.  A break down below 1837 can still see support maintained at 1833ES for a bigger wave iv.  However, a break down below 1833ES will open the door to the larger wave 4 targeting the 1812-1818ES region.

So, as I have been cautioning all day, this is not a set up one wants to trade at this time.  If we see a break down below 1833ES in impulsive fashion, then a day trader may attempt a short for at least 10 points.  However, if the triangle plays out over the next day or so, then a long trade may be attempted to target the 1866ES region.  And, if we do drop down to the 1812-1818ES region, then a long trade may be attempted there.  A break down below that region gives us a relatively clear signal that a bigger top is likely in place, and the downside would be suggestive of at least the low 1700’s. 

For now, we simply should allow the market to show its hand.

 Elliott Wave Chart