ES Update: How I'm playing it!

Technicals Point To Another High 

At the weekly chart level (not shown) my technical indicators point to another recovery high. As such, I'm looking for a way to marry the short term 60 minute chart pattern with the larger degree trend. 

The initial decline was easy to identify as a three wave corrective zig-zag pattern. 

Note: I have highlighted the current price action from the termination point of the zig-zag. We will be evaluating that region.

Building The Trade Plan 

According to the Elliott Wave Principle, corrective patterns that begin in three, have the following corrective patterns associated with them:

1. 3-3-5 Flat - Under this pattern the second part of the pattern will be another three wave structure. The possibilities are another zig-zag, a flat or a triangle. 

Right of the bat, I see the market is sideways and any sharp (zig-zag) can be eliminated. Secondly, a flat would retrace most of the initial decline... which it doesn't. 

That leaves us with a triangle in the w.b position!

The following chart illustrated the triangle interpretation. Under this scenario, I'm looking for the market reaction to the jobs report and ECB to be muted. As enthusiasm wanes, the market will drift lower in w.(d).

2. 3-3-3-3-3 Triangle - You will find that this pattern is very similar in nature with respect to the middle part of the pattern but the resolution is to the upside. 

Each scenario promises more sideways price action, therefore that's my clue that my interpretations are correct. 

Solving the Directional Issue

Since there is no way to be certain of the direction of the thrust that accompanies these (2) triangular patterns, I am taking a conservative approach and playing the breakout once the respective (d) waves are exceeded.  

Let's see what develops

Best of Trading

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