The Emini closed up 1.50 points at 1,426.50 on Wednesday. Wild couple of days after a very dull 5 days of consolidation. The long term trend pattern looks like it’s coming to an end with a Wave 4 setup. Check out the chart below.
The Emini gapped up 5.0 points at 1,430.00 and profit taking immediately set in. The high was quickly set just 0.5 points above the open at 1,430.50 and followed by over an hour of selling down to the low at 1,423.00. The market then bounced up to retrace over half this selling range. Then the Emini tested the lows on small volume before some high volume buying in the last hour. The market eventually closed at 1,426.50. Range for the day was below average at 7.50 points and volume was average at about 1.0 million contracts traded.
Cycle indicator and Elliott waves
The chart above shows John Ehlers Hilbert Sinewave indicator. This indicator was used in my last post on a 135 minute chart to show this last cycle low. In this case the indicator is being used on a daily chart. The indicator has 2 benefits:
- It dynamically adjusts and usually signals cycle highs and lows early
- When price starts trending the indicator lines no longer cross, until the trend ends
As you can see in the chart above the last cross of this indicator was on 17 August, when the Emini changed into an uptrend pattern. I indicate these cross levels on the daily bars with the white and red dotted lines – these often act as support and resistance as the move continues.
These trend moves (Elliott wave 3) eventually come to an end with the indicator starting to show cycle swings again. The rise over the last 2-3 days should come to an end very soon, hit a high and then retrace (Elliott wave 4). Look out for this over the next few days.
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