ES #F 081506

Market gapped up on 08:30 report, to 1285.75. Currently, we have 5 waves up off the 1262.50 low. The low yesterday was made at 1270.75, which is aa fib level of .707. Market is now overbought and getting toppy. IF we continue to go higher, THEN upside targets will be 1286.50, 1287.50, test of 1288.25 high, and 1290.25 to 1291 for now. But we have possible 5 waves also from 1270.75 low of yesterday. Divergence on 6000V chart says a sell short off the 1285.75 is a good low risk, high reward trade. Yesterday's high at 1283.25 is potential support and LIS. This needs to be broken and act as resistance before more downside is possible.

Update at 09:47 EST. Price action slightly bullish. let's see if we can go higher. We have a small double bottom off 1282.50 here for up. 8min chart has no buy signal as of yet though. Small 5 waves down off the 1285.75 high, so look for retracement and test of high again. Then looking for more downside activity.

Update at 10:09 EST: 60min has no sell pattern as of yet. So we probably go sideways for a bit.

Update at 10:52 EST: We made a higher high into 1287.00, which is a 1.27 fib extension. Sell entry against 1287.00 high for good risk/reward trade entry. Only problem is, we could be in a wave 4 for higher still. With a tight stop, we have a good entry for the trade, with a good risk/reward profile.

Update at 12:13 EST: we made a 3 wave pattern into re-test of low at 1284.00. IF this is a wave 4, THEN we should make a run for a higher high. However, the 1287.00 high needs to broken in order for this to happen. Be watchful for 5 wave diagonal triangles pattern in wave 5 positions and in wave B positions.

Update at 13:04 EST: Double top at 1287.00 for adding a JOT sell short.

Update at 13:22 EST: Market finds s/t support at YH (yesterday's high) of 1283.25, which is also a .618 fib level. Unless the 1287.00 gets broken to the upside, we have possibility of further downside activity.

Update at 13:34 EST: Buy signal off the 6000V chart for a move to test the high at 1287.00. Market is slightly bullish. Higher high is still possible for now. Targets are: 1288.00 region, then 1290ish if market very bullish. Is this going to be a complex flat type of pattern? Will we make an abc move up and then fall back hard? Watching lower timeframe charts carefully. 30min chart remains bearish for now. If bullish, one can buy against the 1283.00 low and place stop just below that level. If bearish, one can sell against the 1287.00 high with a tight stop just above that. In other words, we have been stuck in a relatively narrow trading range all day. One thing to keep in mind right now is the fact that we are trading above both YH and OP. IF OP breaks again, THEN we should go lower.

Update at 13:46 EST: Price action bearish. Looking for OP to break and for market to go lower.

Update at 14:24 EST: Price action bullish, looking for higher high now. 1287.50 target hit.