ES #F 082406 Butterflies are free to fly .... fly away .....

The daily chart shows potential 5 waves down into 1291.50 support. IF we have 5 waves down, THEN look for abc correction into the .618 fib level. Market looks like it has made the waves a and b, and now we are in wave c. Upside targets are: 1300.25 and 1301.50. 1301.50 is a potential PRZ, as it is a .618 fib, .707 fib and a .786 fib. It is also yesterday's OP. 120min. chart shows more upside is possible.

Update at 09:09 EST: First target at 1300.25 hit. 1300.50 is now a .707 fib level and a 1:1 price projection -- 120min chart still bullish. If chart remains bullish, upside target after 1301.50 is 1304.25 test (this is another PRZ -- .786, .886, 1.00 and 1.618 price projection).

Update at 09:49 EST: OP is at 1299.75 and market made a higher high at 1300.75 before pulling back in anticipatio of 10:30 EST report. 8min, 6000V and 15min charts now have a sell pattern in place, and looking for gap close at 1297.75. We have what looks like an abc 3 wave pattern into .707 fib level. 120min chart remains bullish for now. So long as the 1291.50 holds, we can look for a buy pattern upon re-test of this low.

Update at 10:01 EST: Gap is closed. Looking for more down now, and possible re-test of 1291.50 -- we could be stuck in this range for a while. Downside targets: 1293.50, 1292.50, test of 1291.50.... and possibly lower with 10;30 EST report.

Update at 10:38 EST: market more bearish now, as we have fallen back through the LIS of 1297.75. The high at 1300.75 is a possible end of wave b, and wave C could go lower, and it could impulse, so watch for possible fast downside action. Holding short position with a trailing stop for test of low at 1291.50 and possibly lower. The reason I believe that it is possible for lower is the position of the daily chart, and the 120min and 60min charts.

Update at 10:59 EST: Mixed signals, so we can be stuck in this range for a while. So far, we have had 3 waves up into 1300.75 high. Is this wave 4 of 5 waves, or is this the end of wave b and now we are in wave c? It's a tough call, so best to scalp off lower timeframes for better profitability. Both the 8min and 6000V chart gave a buy signal off the 1295.75 low. As did the 15min chart.

Update at 11:30 EST: Continue to have mixed signals. Higher timeframe charts slightly bearish. IF market goes back to test 1300.75, THEN look for a possible sell signal to be generated there. IF we go to test the low at 1291.50, THEN look for a possible buy signal to be generated there.

Update at 12:43 EST: Low now at .786 fib level and a bullish gartley butterfly pattern for a long entry. Watching carefully as higher timeframes still bearish.

Update at 13:22 EST: Bullish gartley butterfly working well. We have overbalanced, and looks to be heading higher. Upside targets to watch for: 1299.00, 1300.75 test, 1302.75 ish (potential PRZ).

Update at 13:45 EST: Butterflies everywhere -- we just had a small bearish gartley butterfly at the .707 fib for a swift downmove to re-test the low at 1293.50.

Update at 14:17 EST: 1299.00 upside target hit. Possible pullback here before higher. Higher timeframes still bullish, so let's see if we can reach 1300.75 test and then 1302.75. The current high at 1299.00 sets up another bearish gartley butterfly pattern. However, the 120min and 60min charts both remain bullish with no sell pattern developed.

Update at 15:16 EST: If short from 1299.00 high and bearish gartley butterfly, you were not stopped out -- looking for .786 fib at 1294.75 and possibly lower to 1.27 fib at 1292.00.