Eyeing ES 1423

By Avi Gilburt, ElliottWaveTrader.net Yesterday morning I provided members a chart for the target of a potential wave 2. Well, the upper target was hit to the penny, and the market then reversed up in a 3rd wave. Since this was the 3rd wave within wave iii, which is the strongest part of a market move, the market gave us a very nice 14-point trade. Again, our Fibonacci Pinball gave us excellent targets and expectations during this move up. When we see a strong extension up for wave 3 of iii, the most likely target is the 1.00 or 1.236 extension. In very strong moves, we target the 1.236 extension, as we did today. So, now we are going to see a consolidation/pullback for a wave 4 of wave iii. Based upon our Fibonacci Pinball, when the market hits the 1.236 extension for wave 3, a wave 4 will likely target the .764 extension. Furthermore, Frost & Prechter tell us that a 4th wave will usually target the .382 retracement of wave 3 and the level of the wave 4 of one lesser degree. On our chart, we can see that all of those levels converge at the .764 extension. This makes it a high probability target for wave 4. Furthermore, with this move up this evening, that same level is where c=1.382*a. So, lots of confluence at that level indeed. However, if the market were to not hold that level as support, then it would concern me about further bullish potential. A break down at this time below the top of wave 1 (1408ES) would invalidate this as a standard impulsive move, and get me considering that the top could be in. But, that is not my expectation at this time. We have been looking for the market to hit the 1423 level, ideally, and it looks like we are targeting that level as early as Friday to complete wave iii. I would seriously consider selling all longs if that level is hit. See charts illustrating the wave count on the Emini S&P 500 at https://www.elliottwavetrader.net/pcharts/Targets-Hit-on-Emini-S-P-2012081624.html Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.