Yesterday, short term hourly Elliott wave charts expected upwards movement to at least 1,198. Price has reached up to 1,200.03 so far.
Summary: In the short term the bull wave count expects a small fifth wave up to about 1,209 and the bear wave count maybe only to 1,201. Thereafter, the wave counts diverge. The bear wave count expects a very strong downwards move to begin soon and the bull count requires more upwards movement. Volume for Tuesday is lower, which supports the bear wave count and not the bull.
I am very pleased to be able to tell members today that yesterday I sat and passed the level II exam for CMT.
Click on charts to enlarge.
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.
4. Volume continues to not support this bull wave count. If a third wave up is beginning volume should show an increase, not a decrease. “When prices are rising volume decreasing is questionable.” (Kirkpactrick and Dahlquist)
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 0.67 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.
Although a three up can be seen as almost complete this cannot be minute wave iii close to completion, because minute wave iii must move above the end of minute wave i at 1,215.20. Only if the next short wave up moves above that price point would I consider labelling minute wave iii as complete, but for now I am moving the degree of labelling down one degree from yesterday for this upwards movement.
Within minuette wave (a) or (i) a first and second wave for subminuette waves i and ii would now be complete. Subminuette wave iii would reach equality in length with subminuette wave i at 1,209.
Within subminuette wave iii micro waves 1, 2 and 3 are complete. Micro wave 4 may not move into micro wave 1 price territory below 1,190.48.
When micro wave 5 upwards completes the impulse for subminuette wave iii then another fourth wave correction for subminiuette wave iv should unfold downwards. When subminuette wave iii is complete redraw the channel using Elliott’s first technique: draw the first trend line from the high labelled subminuette wave i to wherever subminuette wave iii ends up, then place a parallel copy on the low labelled subminuette wave ii. Subminuette wave iv may find support at that lower trend line.
Subminuette wave iv may not move into subminuette wave i price territory below 1,192.99. This invalidation point only becomes active when subminuette wave iii is complete.
Minuette wave (b) or (ii) may not move beyond the start of minuette wave (a) or (i) below 1,169.94.
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). This possibility would see minuette wave (c) down as too time consuming though. It is possible, but it looks unlikely.
Bear Wave Count
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 Tuesday is slightly lower than the prior upwards day, which supports the idea that this upwards movement is a correction against the trend.
Minuette wave (ii) is incomplete, and needs one small final fifth wave up at micro degree for the 5-3-5 zigzag structure to be complete.
At 1,204 micro wave 5 would end just slightly above the end of micro wave 3 at 1,200 avoiding a truncation. At 1,201 micro wave 5 would reach 0.618 the length of micro wave 3 and at 1,200 subminuette wave c would reach 0.618 the length of subminuette wave a.
If price moves above the target at 1,201 then look for the next area of resistance to be the upper blue trend line here copied over from the daily chart.
Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,215.20.
When minuette wave (ii) is complete then this bear wave count expects a third of a third of a third of a third wave down… that’s a third wave at four degrees. The next downwards movement for this wave count is expected to show a strong increase in momentum. If it shows an increase in volume that would further support the bear wave count at the daily chart level.
This bear wave count requires a new low below 1,142.82 for a reasonable level of confidence.
At 1,081 minute wave iii would reach 4.236 the length of minute wave i. I am using this Fibonacci ratio in this instance because minute wave i was so short, and it fits nicely with the target one degree higher for minor wave 3 at 1,059.
For the bear hourly wave count draw the channel using Elliott’s technique for a correction: draw the first trend line from the start of subminuette wave a to the end of subminuette wave b, then place a parallel copy on the end of subminuette wave a. When this channel is clearly breached by downwards movement (not sideways) then it may be the earliest indication that minuette wave (ii) is over and minuette wave (iii) down may have begun.
This analysis is published about 04:15 p.m. EST.