14:03 BST - ES Update: 60 min chart

Futures are starting to look like they may be running out of steam. You can see on this 60 min chart of ES that its traded to the upper line of the red fork. Its a specultaive fork since the lower line isn't drawn off a price pivot. However, it does seem to have done a good job of capturing the action since the low on 19 August that touches its lower line:

EX 60 min:

You can see how the rally in price since Friday afternoon took price above the median line of the red fork. Overnight, it had a brief spike down to the daily pivot, bounced back up again and headed to the upper line of the red fork.

It just tried to break above but came back in as it met with the ichimoku cloud resistance.

Now, we're seeing bearish divergence between price and the MACD histogram and the slow stochastic looks like its double topping. If we stay like this into the cash open, the current level of ES suggests a cash price of about 1077 which is about the 38.2% retracement of the decline that I have labelled as wave [1] of iii down (see Friday's end of day update).

If that's where we get to at the open, its  possible that that level will mark the end of wave (A) of [2] and not where I currently have it, so I'd still be alert to the possibility that there is still more upside to come before wave [2] ends. Obviously, this could change if we gap up then just drop below Friday's low. Let's see how the cash opens and what the action in price and the indicators tell us. 

13:59 BST - ES Update: 60 min chart

ES on the 60 min chart has been moving up since yesterday's afternoon low, within a new upward fork. Its just reached the upper line of the red downward fork that delineated the drop from the recent highs, so this may provide at least temporary resistance:

 

ES 60 min:

To confirm more upside, we need to break above the red fork's upper line and get towards the upper line of the green fork. We're above the moving averages and the cloud, so things are aligned for more upside. 

The only worrying thing is that as of now, the Dow futures have failed to make a new overnight high along with ES. That's often not a good sign. It may work itself out, but if not, it may be a warning of a possible failed gap up to come when the cash markets open.

18:32 BST - ES Update: 60 min chart

Since its Friday and I'm bored with this price action, here's an update of the 60 min ES chart I posted before the open, showing the continuing struggle going on against fork, cloud and moving average resistance:

ES 60 min:

It all suggests we should move down again, but the market is always ready to surprise.

11:31 BST - ES Update: A confluence of resistance

Here's something you might find interesting (or not!). Some interaction between pitchforks, conventional technical analysis of lines of resistance and moving averages and the ichimoku cloud resistance on a 60 min chart of the emini S&P futures:

ES 60 min:

The red downard fork has been on the chart since 10 August. It was only speculative because the lower line isn't drawn off a pivot, I just drew it so that the median line cut through the price action that preceded the pivot which formed the start of the upperline of the fork.

It wasn't perfect in containing price, but it did a reasonable job. The median line did provide resistance yesterday for a while, and when price broke above it, it came back briefly to test that median line.

As we would expect when price gets above the median line of a fork, it went up to the upper line and broke through it this morning.

You can see that an upward green fork was drawn from pivots that occurred yesterday and price seemed to be following the median line of thaat fork up.

However, it hit an area which represents a confluence of resistance as identified by various groups of traders - those using pitchforks, (price was re-testing the median line of the green fork having backed off it earlier) those using ichimoku clouds (price was hitting the underside of the cloud) and those using conventional technical analysis of resistance lines (see the blue horizontal line) and moving averages (price came to the 50ma).

With price hitting an area of resistance being looked at by all those groups of traders, you can see the reaction that just occurred.

I've now drawn in another fork (purple) using the pivot high we hit today. If this down move is to continue, we should see price move down to the median line and, possibly below (like it did in the red fork). Let's see.

14:01 BST - ES Update

Here's ES with the same double zig zag count as before. Its the count that on SPX might be considered the least likley out of the three I posted in last night's update. Still, its valid until its not:

Es 5 min chart:

Getting below that wave (1) low would be a start for this count, but not conclusive.

13:57 BST - ES Update

I've changed the count on ES to the double zig zag I've been using on SPX. We still haven't taken out the high from overnight on 13 July (which I have labelled 3 of (C) of [X]) so where I have the end of [X] may only be the first wave of wave 5 of (C). Taking out the wave 4 of (C) low (assuming its in the right place) will eliminate the possibility of wave 5 extending.

ES 5 min chart:

14:10 BST - ES Update

Last night's update showed a potentially complete correction (double/single zig zag) into yesterdays high.

Here's the count for a complete corrective wave on ES at the overnight highs:

ES 5 min chart:

If the move off the 1 July lows was corrective, we need to see really decisive impulse moves down now, assuming the correction is complete. Otherwise, there remains the risk of the impulse count from the July low which I show in the chart of Option 3, which could just keep taking us higher. On SPX, the invalidation point for that impulse as labelled is 1028.74 - its a long way away, so as ever, caution is required on the short side.

14:04 BST ES Update

I can't say this is a high confidence count, but everything I'm watching does seem to be moving higher in a wedgie fashion and on waning momentum.

If its a diagonal, wave (5) needs to be shorter than wave (3), so I think the invalidation point is at about 1089. So, it could be invalidated quite quickly.

ES 5 min chart:

13:10 BST - ES Update

Its possible to count 5 waves down from Friday's high on ES:

Es 5 min chart close up:

The alternate that we are still in the 4th wave down seems unlikely given how much it has retraced (over 61.8%). Clearly, Friday's high would be the invalidation point for this count.

If it does turn out to be correct, it would fit nicely with the completed ending diagonal on SPX that I showed on Saturday. Obviously, be aware that the other counts I showed in the same post anticipate more upside and I don't think the risk of that can be completely discounted at the moment.

Here's a wider view of the 5 min chart for context:

ES 5 min:

 

14:11 BST - ES Update

The high of the 5 wave move up on ES shortly after the open yesterday looked like the completion of wave [C], but it seems it was only the 3rd wave of wave [C]. It took until after the cash session closed for ES to take out that early session high.

Now it looks like we may either have a top for wave [C] or be very close to one, just as appears to be the case on SPX. Here's the ES  chart:

ES 5 min chart:

 

14:49 BST - ES and SPX Update

Well, on ES it looks like 5 waves up to 1067.75 from the low I marked as (4) of [C] on the chart posted earlier. On this count, it should mark the end of the zig zag - let's see - it could be taken out pretty quickly!

ES 5 min chart:

The SPX could be a complete 5 up from the [B] wave low on this double zig zag count, if it had an extended wave (5), or it could have another high to go - if the futures have topped its likely SPX has too - at least for today (we have hit the bottom of the gap I mentioned last night):

SPX 1 min - double zig zag:

11:35 BST - SPX and ES Update

In last night's Update I showed a double zig zag count for the move up from 1010.91. On that count, we'd be looking for 5 waves up from the low marked [B] at 1039.93. My labels showed a complete 5 from that level, but the alternative is that we are only in the 3rd wave of 5 to complete wave [C] of the second zig zag.

An alternative is a single zig zag from the 1 July low which puts us well into wave [C] to complete the zig zag. Here it is on a 1 min chart:

SPX 1 min chart - single zig zag from 1 July low:

Obviously, on this count, we need to see 5 waves up from the [B] wave low at 1018.35, whereas the double zig zag count requires 5 waves up from the [B] wave low at 1039.91. If, on the double zig zag count, we're only in the 3rd wave of 5 a wave move, there could be quite alot more potential upside to go if the 3rd wave extends as it probably should. The single zig zag count anticipates less upside.

The single zig zag count is what I have now labelled on the futures also. Here it is on a 5 min chart:

ES 5 min chart:

13:44 BST - ES Update

Here's  a 5 min chart of ES showing what I think may be happening, using the nested ones and twos Count (Count 5) I have for SPX (see the chart of Option 5 for SPX from last night):

ES 5 min chart:

I have a possible wave iv top at yesterday's high (which coincides with the high in the cash session). It does look like a clean 5 waves down from there on ES for wave [1] of v,  followed by some sideways action which looks corrective. 

I'm labelling the sideways action as (A)-(B)-(C) for the moment and once complete it would be wave [2] of 5 on this Count (see last night's Update on SPX for the other Counts from the SPX high of 1131.23). Obviously, yesterday's high is crucial to this Count (as it is for SPX), so that's where I'll know its wrong and will then look for more upside in a continuing wave iv, though I'll be alert to the possibility of one of the more bullish Counts perhaps being in operation.

13:58 BST - ES Update

Futures made a new low below the 1 July lows overnight. However, from Friday's high to the new low looks more like 3 waves rather than 5, so it may still be part of an on-going 4th wave corretion (or 2nd wave - see the SPX update from Friday night) rather than  a 5th wave down:

ES 5 min:

On the above chart, which is the nested ones and twos  count (Count 5) I've shown either a completed 4th wave at Friday's high, or, the 4th wave still in progress. The latter may seem more likely at this stage. If it takes out Friday's high, then it will become the main labelling for this count.

12:25 BST - ES and SPX Update

Its early to do so, but looking at the overnight action in the futures, it can be counted as a complete zig zag up from yesterday's lows. Here's the 5 min chart of ES:

ES 5 min chart:

As noted, however, it could just be the first zig zag in a double zig zag, especially if we're in a 2nd wave correction of the entire decline from 1131.23 (see the count on the chart of Option 1 for SPX) rather than a 4th wave correction.

During yesterday's session I posted a possible complete zig zag count for SPX and here is the updated chart:

SPX 1 min - complete zig zag from 1010.91:

Obviously, the high of 1030.32 has to remain intact for this count to remain valid.

Naturally, there are many ways to count the move off the low. Here are two on SPX which anticipate more upside to come (and would likely mean a double zig zag playing out in the futures):

SPX 1 min - single zig zag with [C] in progress as an impulse or ending diagonal:

SPX 1 min - double or single zig zag with [X] or [B] in progress as a triangle:

With the jobs number coming out before the cash open, this thing could go either way - best therefore, to wait and see once things settle down after the number, but perhaps we'll find out today whether we're in a deep 2nd wave correction of the decline from 1131.23, a shallower 2nd wave correction of the decline from 1082.60, a 4th wave correction or a rally that's going to take us back above 1131.23 (see last night's SPX update).

 

12:52 BST - ES Update

Here's the 5 min chart of ES with the nested ones and twos count which I have on the Option 5 chart of SPX:

ES 5 min chart:

From the presumed wave [4] high (which marked yesterday's high in SPX), its possible to count 5 waves down to the overnight low. If correct, that would complete wave iii on this count and we would expect a wave iv rally today. On  some other counts I'm following, this 5 waves down from the wave [4] high would represent a complete 5 down from the 21 June highs and would imply a deeper rally in a 2nd (or a B) wave. See my post from earlier today on SPX.

However, as you can see from the chart, the main alternative is that the decline from the presumed wave [4] high (which I can count as a 3 or a 5) is actually part of an expanded flat type correction, with a C or Y wave up to come, and which may have started from the overnight low. 

The rally from the overnight low doesn't look too impulsive, so chances are it may be part of a correction. You can see that I've labelled another possibilty, that we're still in wave (4) of [5], so that too needs to be borne in mind since it may mean we are closer than under the main alternative to a low for this decline.

You should also note that if I move the wave [4] label one peak to the left, which was a pre-market high in ES, instead of aligning it with the cash session high, there is a clear 5 waves down to the overnight low, so a larger rally of some degree (see my SPX post from earlier today) would be in the works now.

14:19 BST ES Update - 60 min Ichimoku Chart

This 60 min ichimoku chart of ES paints a very bearish picture:

Notice how even with the overnight rally, price was unable to get anywhere near the cloud and the lagging line (green) showed no sign of getting above price. All this despite the Slow Stochastic getting to overbought.

Price has now fallen back below the turning line (blue), which, by the way, never got above the standard line (red) and the overall picture suggests more downside to come.

Things can change quite quickly, so I'll be keeping a close eye on this.

13:33 BST - ES Update

The zig zag down from the 21 June high is gone now. That leaves the nested ones and twos count that I have on the SPX Option 5 chart (though the degrees are different). Here's the 5 min chart of ES:

ES 5 min chart:

Wave 4 of (3) may have happened overnight, but its possible its not complete yet and we've just had the a or w wave of 4. If we're still in wave 4, it can't exceed the wave 1 low. If it does, it may mean that wave (3) bottomed yesterday and we are in wave (4). That can't exceed the wave (1) low. If that happens, then we're probably in one of the counts that shows 5 complete waves down at yesterday's low (see, eg the chart for Option 1 on SPX)

13:49 BST - ES Update

The overnight drop in the futures still leaves open various interpretations of the elliott wave count. Here's a 5 min chart of ES showing one of them:

ES 5 min chart:

I've changed it from yesterday (which had us looking for a possible 2nd wave bounce), to the more bearish nested ones and twos I showed in the Option 3 chart of SPX last night. This implies a long way down to go.

However, there are less bearish possibilities which could mean that after a quick drop to complete a 5th wave down, which may be all but done in the futures, we see a large retracement up in a 2nd wave - see Option 1 for SPX.

On the more bullish count, see the alternate shown on the above chart, the overnight decline would be wave (C) of [Y] of ii, completing a second zig zag down from the 21 June high. If that is the correct count, the 21 June high is likely to be taken out, even if we are only completing wave [ii] up (as Option 2 on SPX suggests). See Option 5 on SPX for an even more bullish count which implies new highs above 1219.80.

So I'm going to be on the alert for signs that this decline marks the end of the decline from 21 June and may lead to a more significant rally than we have experienced since then. I'll be watching all of those levels identified in last night's SPX update and keeping an eye out in particular for that 1042.17 level which is currently so important to the more bullish counts.

 

13:28 BST - ES Update

Here's a 60 min ichimoku chart of ES showing a bullish cross of the turning line (blue) above the standard line (red), with price moving above both and the lagging line (green) above the price line. These bullish crosses occurred below the cloud, so were weak buy signals and price has failed to follow through so far, in particular, failing to get above the cloud. 

ES 60 min ichimoku:

It paints a fairly neutral picture at the moment, but looking into the future (26 periods out), the cloud is showing signs of turning negative if the red outline goes below the blue outline.

So, the initial bullish signs from earlier are in danger of failing. I'm watching the lagging line in particular since if it can't get above the cloud, (its struggling to overcome resistance at the standard line currently) it'll be a warning that something may be wrong with any rally that takes place. If it falls below the price line, that's bearish.