ES Morning Update June 24th 2022


The price action yesterday gives me the feeling a big move is coming next week, and I think it will be up... not down. It's acting very similar to the May 22nd-26th period, which was right before it broke out of the falling dashed white channel and ran for the 4202 high on the 30th.

They love to keep everyone guessing over any weekend so there's no reason to think this one will be different. Support below is 3765 but the key level is 3730.  If we don't lose it today then odds will shift in favor of this up move continuing into Monday, possibly Tuesday.

We could hit the 4000-4100 resistance zone by then of course, or fall shy.  But that's where I'd look for a pullback for a wave 2 of some degree with the rally up to it being the wave 1 of course. I discussed this yesterday in the morning update with the different scenario's about making a lower low in a wave 5 or the low being "IN" and we start the move up into July/August, so re-read it if you need to.

We are in the "turn window" today with the Seasonality Chart for Mid-Term ONLY Years, which doesn't have to put in the low as it could come early. But it's the window where an aggressive turn is made... meaning the low could be the current 6/17 low at 3639.  It's not a safe trade in my opinion as the odds are still 50/50 for the low being in right now.

The alternative is that we could be in a small wave 4 up, that should take out the 3843 high on 6/15, which was a tiny wave 4 up inside small wave 3 down.  Then the small wave 5 down drop into next Tuesday or so.  It should be a lower low (if that's the correct count?) but wave 5's can truncate short, therefore a double bottom or even a higher low is possible.

The turn window is really from today to next Monday or Tuesday from the Seasonality Chart.  If we bottomed early at the current low then that's fine too as then we'll just see a quick pullback of say 50% or so of the current move up, which might end today or Monday close to the falling light blue trendline.  That's the wave 1 up and wave 2 down count of course.

As you can see it's still up in the air for which count is correct but both suggest another move down is going to happen before a stronger rally back up.  With the wave 1 up and 2 down scenario we should have a higher low in the pullback, which would be a great spot to get long for a strong wave 3 up afterwards.

In the wave 4 up and wave 5 down scenario we should have a deeper pullback that should (most do) make a new lower low.  It could go as deep as the 200 week simple moving average around 3500... I just don't know?  That would be a flush out move of course, but slight pierce of the current low of 3639 seems more likely as then it could just hit the stops on the bulls and reverse right back up again.

I don't know which is going to happen as I can see either one as possible.  The extreme bearishness out there now due suggest that even if get the the flush out drop it will be very fast and short lived.  Have a great weekend.

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