Picture perfect. How some of you folks who are trading took advantage of this dip. GL!Pre Market
Overnight futures dropped approximately 9 pts and so far has respected the red trendlines converging to form a triangle. This may offer clues as to what may happen in the cash markets.So far, as of 4:55 am, ES has recovered about 50% of the dip and currently trading at -4.
So how do we translate this to cash?
My primary count was expecting a pullback for wave c, possibly retest 1315 or right near that ascending trendline if a triangle is in play, which may be the case based on ES.
However, if a steeper pullback is in store, it may form a flat. That can range anywhere between 1316-1309, however, it must not exceed 1308 or else there will be a 4-1 overlap. Should the pullback fall below 1308 we may consider this leg up complete.
One other thing I wanted to point out with the opening pullback. Since I have labeled the corrective waves a and b red, naturally wave c down is expected. That would mean five waves down.
However, keep in mind wave 'a' could potentially be a wave 'w' and wave 'b' potentially a wave 'x'. So what does that mean? A wave y down may be in store versus a wave c. They virtually mean the same thing but with a slight difference in what the structure would look like.
As mentioned above, wave Cs internal structure is a five wave impulse. Wave Ys on the other hand is technically a zigzag as part of a double zigzag series. So wave C may look like five waves down and Y may look like three. Just something to keep in mind.
