Market Whipsaw

We have been attempting to ascertain where wave iii in yellow has ended, with a confirmed wave iv in 3 waves.   Today, I noted that the 1635ES level was important support for the possibility of an irregular b-wave, which would then give us a c-wave higher to complete a wave iv.

However, as we moved up today, and I cautioned that a top at the 1.618 extension target of 1655ES – which was hit to the penny – must hold 1649ES, the 1.00 extension region, and stops for longs should be placed just below that.  When the market took it out, and then confirmed with a take out below 1647ES, it gave us a strong clue that we will not likely be seeing 5 waves up, which means that there is only one way to complete our wave iv . . . and that would be in a more complex WXY pattern, which is represented in yellow.

However, we may still have not completed wave iii, as I have mentioned several times throughout the day.  At the end of the day, I posted the following day-trade alert:

IF we break 1640ES, it makes me suspect that wave iii in yellow still has not ended.  That would mean we are in the 5th wave down in wave iii, with it beginning with a leading diagonal, and the rise today was only a wave (2).  The target region for this decline would be between 1613-1620ES.

So, for now, the 1.00 extension down for this bigger 5th wave extension in yellow wave iii resides in the 1634/35 region.   A break below that will confirm we are targeting the 1613-1620ES region within the next day or so.

 Elliott Wave Chart