The ending diagonal that was in progress since mid-March finally appears to have topped at ES 1568.00 last Tuesday. Ending diagonals often appear at the end of sustained trends and are indicative of exhaustion of those trends. In this case the ED marks the end of a rally that started last November and traveled 228 points (17%) in the ES, so the down trend should have some significance.
The pattern in the ES since the Tuesday high shows 5 waves down into a low of 1533.25 on Friday. The fact that it was 5 waves helps confirm the possible change in trend. The ES then rebounded into the Friday close. If this analysis is correct then that rebound should not exceed Tuesday's 1568.00 high. A possible target for the corrective bounce is at the .618 retrace of the sell off. That level is at ES 1554.75 and is also right in the wheelhouse of the 4th wave of the sell off. Corrections often are limited to the area of the 4th wave of the move that they are correcting.
