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Does the Head & Shoulders pattern play out? The pattern is clearly in place and setup, now we need to see follow-through. You will notice that in limited Friday trade, ES bounced off the neckline. What I would like to see is a break of the neckline and price to take out the 6/23 low of 884.25 on a close. If that happens, we should find some support in the 870's from the May lows and we conveniently have the 78.6% fib projection @ 874.50. A retrace up to backtest the broken neckline would allow for a nice short entry.
That would be the ideal setup, however, I wouldn't count on it being that easy. It might very well find a 3 of 3 and blow through all that support and never look back. That's assuming the pattern plays out to begin with, which is a big assumption.
Targets? The measured move comes in around 820. The fib projections start at 859.75 (100%) and work down to 817.50 (161.8%). We have additional support from the triangle apex @ 833.25 and the bottom of the X wave @ 819 from 4/21. I'm going to take a WAG and say we find our way down to the 840's.
Here is my current count. It appears that we have indeed finished our downleg, which I have labeled C (cyan) and finished an EWT flat. Sort of a weird structure as there was next to nothing of the 2 and 4 waves. Nonetheless, I believe it is complete. My preferred count would require price to trace out a "triple three", or basically another ABC, which is a rare pattern. I'm very unsure of this count and have my alternate at the bottom of the chart.
It appears as though we may be tracing out a B wave triangle. We clearly have a 5 wave A (white) up. Regardless if this ends up being a triangle or we have completed an EWT flat, price should start to head higher for our C (white) up. When globex opens, I will be looking to get long.
This weeks MP for you profilers.
Crude started its 3 of C in earnest last Thurday. Still short crude via my USO July 40 puts.
This chart is to show the monthly pivots.
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