Is This Wave IV?

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With the market invalidating further downside with the move over 1642ES overnight, it opened the door to this move higher.  However, we are still potentially on track for an ideal 5 wave structure to the downside, with this being a wave iv rise, in an a-b-c fashion.

While it is yet possible that we see a decline in a b-wave approaching the prior lows, which would then set up a c-wave higher into Monday to complete this wave iv, as long as we remain below the 1666ES level, I still think we get a wave v down to complete wave (1) of the yellow c-wave down.

My ideal target region for this wave iv is in the 1657-1663ES region.   So, we are quite close to that region as we speak, so I would be very careful with any long positions in this region.

Alternatively, while I can come up with a pattern that has us having completed wave (1) already, I really feel it is somewhat forced, and would really like to see another decline.  But, a move through the 1666ES region would tell me that we have likely completed this segment of the downside, and we would be looking for further clues as to how to proceed over the next week or so.

For now, my ideal target would be the 1617ES level, which is the 3.00 extension off the high and where the downtrend channel meets that level on August 27.  As always, stay tuned, as we really need a good 5 wave structure down to confidently short a wave (2) retracement into early September.

Originally published on, by Avi Gilburt.