New high still achievable

The market gapped higher this morning, following through with the bullish setup going into Friday's close. After the initial move higher following the open, price has since faded a portion of that move but should still manage to close the day green.

Under the ending diagonal count off the September low that I have been tracking, today's high likely completed wave C of (A) within wave 5 of the ED. Under that assumption, price should be pulling back in wave (B) of 5, with 2921 as ideal support to hold as the .618 retrace. If that support does hold, it should setup a new all-time high as wave (C) of 5 targeting 2957 - 2964 ES next.

Otherwise, if price is unable to hold the .618 retrace at 2921 ES, that would be the first warning sign of a possible breakdown in something more immediately bearish. However, a break below last week's low would ultimately be needed to confirm a top in place, after which I would be looking for a retracement of the entire September rally.

ES Z18 - Micro - Oct-01 1230 PM (1 hour)
ES Z18 - Micro - Oct-01 1230 PM (1 hour)
Garrett Patten is a senior analyst at ElliottWaveTrader covering both U.S. and international equity indices as well as stocks.