ES #F 101906 Butterflies Everywhere and Options Expiration

GL is at 1369.50, which is a .707 fib level. We had 5 waves up off yesterday's low of 1367.75 into GH of 1374.00. A sell short entry against that 1374.00 upon first test is good low risk entry trade. Only problem area is the 120min chart, which still shows some possible upside.

IF this is wave b, THEN we still need wave(s) c and possiblly d and e to complete a more complex wave 4. IF wave 3 is complete (off daily chart), THEN look for larger or deeper retracement for the end of wave 4.

Update at 09:25 EST: 3 points made on that sell short entry against 1374.00 high. Hold 1 runner for possible lower. Downside tgts: 1368.50, 1367.75 test, 1366.00ish, 1364.00 test, 1362.25, 1360 ish.

Update at 09:39 EST: abc 3 wave pattern into .786 fib level of 1369.00 for a retracement and profit-taking. Small wave c had 5 waves down to 1369.00 This makes for a bullish gartley pattern. IF this patten works, the 2 tgts are: 1373.00 and 1375.25 ish, and even 1377.50 ish (and a gap close at 1372.50 of course). 6000V chart shows buy pattern setting up to trigger.

Update at 09;59 EST: Resistance again at the 1372.0 LIS, which also happens to be a .618 fib level. Both 8min and 15min chart's have no sell pattern signal as of yet. Mixed signals thus far, which confirms that we are in chop. 8min says to look for gap to close at least.

Update at 10:04 EST: gap close tgt hit; Next is higher still.

Update at 10:25 EST: 1.27 fib tgt at 1375.50 hit. It is also a .618 fib tgt. This creates a bearish gartley butterfly for the sell short. It is a gartley type pattern since we have made a 3 wave pattern into the .618 fib level. However, market is still bullish. 1377.50ish tgt still possible. However, I was taught that after the .618 fib level is hit, look for retracement back to the previous .382 fib leve... which in this case is 1372.50 ish. We also have an overbalance situation in place.

Update at 10:37 EST: Market is tracing out 3 wave patterns everywhere. This move is could be end of wave b and beginning of wave c. Downside tgts now: 1370.75, 1369.50ish, 1368.75ish, 1367.75 test, 1365.75ish, 1364.00 test.

Update at 10:53 EST: Small .500 fib level here offering support at 1372.25. 34ema is flat, so that indicates congestion. Expect the high at 1375.50 to hold for the time being.

Update at 11:13 EST: 3 waves down into .707 fib level support at 1371.00. Mixed signals continue.

Update at 12:02 EST: 1370.75 tgt hit. 3 wave abc pattern down into support. Now we have a bullish gartley butterfly as we did a 3 wave pattern into a small .786 and bigger .618 fib level. Expect some kind of profit-taking and retracement before heading lower, as higher timeframe charts remain bearish.

Update at 12:52 EST: 1369.50 tgt hit; it is a .786 fib. We now have a bullish gartley butterfly pattern. Upside tgts: 1373.00, 1373.75ish, 1374.00, 1375.50, 1377.50ish.

Update at 13:45 EST: .618 fib level hit at 1373.00; sell pattern off both 8min and 6000V. Mixed signals, making it more difficult to determine true trend. Are we in a 5th wave diagonal triangle? We seem to be making a series of 3 wave patterns all over the place.