Upwards movement fits the alternate hourly Elliott wave count best, which works for both bull and bear wave counts at the daily chart level. Volume continues to be a strong indicator of which Elliott wave count is more likely. I have another weekly chart for you today to look at volume.
Summary: The bear wave count expects a second wave correction to end about 1,198 before a strong third wave down begins. The confidence point for the bear count remains at 1,142.82. The bull wave count expects a third wave up has begun. The confidence point for the bull wave count remains at 1,215.20. Volume continues to favour the bear wave count and is a concern for the bull wave count. In the short term a new low below 1,169.94 would indicate a third wave down for both bull and bear wave counts, at least at a low wave degree and maybe more substantial.
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To see weekly charts for bull and bear wave counts go here.
Bull Wave Count
The bull wave count sees primary wave 5 and so cycle wave a a complete five wave impulse on the weekly chart. In order for members to judge for themselves I will list all points for and against for bull and bear wave counts.
1. The size of the upwards move labelled here intermediate wave (A) looks right for a new bull trend at the weekly chart level.
2. The downwards wave labelled intermediate wave (B) looks best as a three.
3. The small breach of the channel about cycle wave a on the weekly chart would be the first indication that cycle wave a is over and cycle wave b has begun.
1. Within intermediate wave (3) of primary wave 5 (now off to the left of this chart), to see this as a five wave impulse requires either gross disproportion and lack of alternation between minor waves 2 and 4 or a very rare running flat which does not subdivide well.
2. Intermediate wave (5) of primary wave 5 (left hand side of the chart) has a count of seven which means either minor wave 3 or 5 looks like a three on the daily chart.
3. Expanding leading diagonals are are not very common.
Within cycle wave b primary wave A may be either a three or a five wave structure. So far within cycle wave b there is a 5-3 and an incomplete 5 up. This may be intermediate waves (A)-(B)-(C) for a zigzag for primary wave A, or may also be intermediate waves (1)-(2)-(3) for an impulse for primary wave A.
Intermediate wave (A) subdivides only as a five. I cannot see a solution where this movement subdivides as a three and meets all Elliott wave rules. This means that intermediate wave (B) may not move beyond the start of intermediate wave (A) below 1,131.09. That is why 1,131.09 is final confirmation for the bear wave count at the daily and weekly chart level.
Intermediate wave (B) is a complete zigzag. Because intermediate wave (A) was a leading diagonal it is likely that intermediate wave (C) will subdivide as an impulse to exhibit structural alternation. If this intermediate wave up is intermediate wave (3) it may only subdivide as an impulse.
At 1,320 intermediate wave (C) would reach equality in length with intermediate wave (A), and would probably end at the upper edge of the maroon channel. At 1,429 intermediate wave (C) or (3) would reach 1.618 the length of intermediate wave (A) or (1). If this target is met it would most likely be by a third wave and intermediate wave (C) would most likely be subdividing as a five wave impulse.
It is possible that the intermediate degree movement up for the bull wave count is beginning with a leading diagonal in a first wave position for minor wave 1.
A leading diagonal must have second and fourth waves which subdivide as zigzags. The first, third and fifth waves are most commonly zigzags but sometimes they may be impulses.
Within diagonals the most common depth of the second and fourth waves is between 0.66 and 0.81. Minute wave ii is 0.66 of minute wave i.
Minute wave ii may not move beyond the start of minute wave i below 1,142.82.
Within the diagonal minute wave iii is most likely to subdivide as a zigzag, but it may also be an impulse. The bull wave count must look at both possible structures.
So far there is a complete five up. This may be minuette wave (a) or (i).
Minuette wave (b) or (ii) may not move beyond the start of minuette wave (a) or (i) below 1,169.94. It may end about the 0.618 Fibonacci ratio of the prior upwards five at 1,179.
If price moves below 1,169.94 then it may be minuette wave (c) of minute wave ii continuing lower. The degree of labelling within minuette wave (c) down would be moved down one degree, and a third wave down would be expected to be underway within minuette wave (c).
Bear Wave Count
Volume continues to favour the bear wave count, at the daily and importantly at the weekly chart level.
Since the end of intermediate wave (2) at 1,308.10 on the weekly chart it is downwards weeks which show strongest volume. During the last upwards rise (three green weekly candlesticks) volume was lower and declined towards the end of that movement. If that upwards movement was a correction it would be expected to show declining volume towards its conclusion, which fits the bear wave count nicely.
On Balance Volume now has a stronger breach of the trend line which is drawn from December 2013. OBV is indicating the trend at this time is more likely down than up.
This wave count follows the bear weekly count which sees primary wave 5 within cycle wave a as incomplete. At 957 primary wave 5 would reach equality in length with primary wave 1.
1. Intermediate wave (1) (to the left of this chart) subdivides perfectly as a five wave impulse with good Fibonacci ratios in price and time. There is perfect alternation and proportion between minor waves 2 and 4.
2. Intermediate wave (2) is a very common expanded flat correction. This sees minor wave C an ending expanding diagonal which is more common than a leading expanding diagonal.
3. Minor wave B within the expanded flat subdivides perfectly as a zigzag.
4. Volume supports the idea that the trend is currently down.
1. Intermediate wave (2) looks too big on the weekly chart.
2. Intermediate wave (2) has breached the channel from the weekly chart which contains cycle wave a.
3. Minute wave ii (the last high) breaches a base channel about the first and second wave one degree higher, minor waves 1 and 2. It is deeper and longer lasting than normal for a low degree second wave within a third wave one and two degrees higher.
4. Within minor wave 1 down there is gross disproportion between minute waves iv and ii: minute wave iv is more than 13 times the duration of minute wave i, giving this downwards wave a three wave look.
This wave count now expects to see a strong increase in downwards momentum as a third wave unfolds. At 1,059 minor wave 3 would reach equality in length with minor wave 1, and both would be extended.
Within minor wave 3, if minute wave ii continues further as a double flat or combination then it may not move beyond the start of minute wave i above 1,224.35.
Monday’s up day is so far finding resistance about the upper edge of the blue base channel drawn about minor waves 1 and 2. Create a parallel copy and push it up to sit on the high of minute wave ii, then copy these trend lines over to the hourly chart.
Volume for Monday is lower than the prior three down days. If this upwards day is a correction against the main trend then volume would be expected to be lower.
Within minute wave iii minuette wave (i) is complete and now minuette wave (ii) is correcting against it. Minuette wave (ii) has passed the 0.382 Fibonacci ratio and the structure is incomplete. The 0.618 Fibonacci ratio would now be the most likely point for it to end about 1,198.
Minuette wave (ii) looks like it is unfolding as a zigzag. Subminuette wave a subdivides neatly as an impulse. Subminuette wave b may not move beyond the start of submineutte wave a below 1,169.94.
Subminuette wave b would most likely end when it looks like a clear three wave structure. A final five up to complete minuette wave (ii) would then be required.
Minuette wave (ii) may end when it touches the lower blue trend line, but if that line is breached then the next line of resistance would be the parallel copy placed on the high of minute wave ii.
Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,215.20.
This bear wave count requires a new low below 1,142.82 for a reasonable level of confidence.
This analysis is published about 03:46 p.m. EST.