The situation is still unclear.
Three Elliott wave counts are presented today.
Summary: Sideways movement is unconvincing as a C wave up. A break now above 1,236.56 would indicate more upwards movement as likely to above 1,275.24 and maybe as high as 1,302. A break below 1,223.83 at this stage would indicate a triangle may complete and be followed by a downwards breakout to about 1,131.
New updates to this analysis are in bold.
Last published weekly chart is here.
MAIN DAILY ELLIOTT WAVE COUNT
Intermediate wave (1) is a complete impulse. Intermediate wave (2) may have begun. COT supports this wave count; the majority of commercial traders are short (as of 29th March). While this does not pinpoint when price should turn, it does support a larger downwards trend about here.
The first movement down within intermediate wave (2) fits as a zigzag. So far movement to follow it is sideways, moving in an ever decreasing range.
At this stage, it looks like intermediate wave (2) may be unfolding as a double zigzag. The first hourly chart follows this idea.
Intermediate wave (2) may also still be relabelled A-B-C; it may still be unfolding as a flat correction. The second hourly chart looks at this possibility.
Within double zigzags, the second zigzag exists to deepen the correction when the first zigzag does not move price deep enough. Here, minor wave W ends just below the 0.236 Fibonacci ratio fitting the description of “not deep enough” for a second wave correction. The second zigzag in the double should be expected to deepen the correction; minor wave Y may end about the 0.618 Fibonacci ratio at 1,131.
To achieve the purpose for the second zigzag to deepen the correction the X waves of double zigzags are normally shallow. A triangle for minor wave X would be a shallow correction. The whole structure would have the right look for a double zigzag.
The dark blue channel is a best fit and is so far showing where price is finding support and resistance along the way down.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,046.27.
FIRST HOURLY ELLIOTT WAVE COUNT – MAIN WAVE COUNT
Minor wave W subdivides as a 5-3-5 zigzag.
Minor wave X may be any corrective structure. At this stage, it looks like it is unfolding sideways as a regular contracting or barrier triangle, the most common type of triangle.
Within the triangle, minute wave c found resistance at the upper edge of the dark blue channel, copied over from the daily chart. Minute wave c should be over here and it is 0.8 the length of minute wave b. A common length for subwaves of triangles in my experience is about 0.8 to 0.85 the prior wave.
MACD does not support this wave count. Often, as triangles unfold, MACD hovers close to the zero line. This is often seen but not always. That it is not clearly happening here does not mean a triangle is not unfolding, so it just slightly reduces the probability. Alternates should be considered.
A new low below 1,223.83 would indicate that the last wave up was a three and is complete. That would add confidence to this wave count. But the triangle may yet morph into a combination. Both are sideways movements and both at this stage would be incomplete.
Minute wave d of a contracting triangle may not move below the end of minute wave b at 1,209.08. Minute wave d of a barrier triangle may end about the same level of minute wave b at 1,209.08 so that the B-D trend line is essentially flat. What this means in practice is minute wave d may end slightly below the end of minute wave b and the triangle would remain valid. This is the only Elliott wave rule which is not black and white.
Minute wave e of the triangle may not move beyond the end of minute wave c above 1,236.56.
If price drifts sideways for another couple of days and MACD starts to flatten off at the zero line, then this wave count would increase in probability. If that happens, I will continue to consider alternates because in the case of triangles this is essential.
If the triangle completes as labelled, then the breakout should be downwards. Minor wave Y may take price down to the 0.618 Fibonacci ratio, and it may last about two weeks.
I would judge this first wave count to have a slightly higher probability than the second wave count below.
SECOND HOURLY ELLIOTT WAVE COUNT – MAIN WAVE COUNT
This was the first main wave count yesterday.
Upwards movement to start minute wave c is so far not looking very convincing. It has failed to make a new high above the end of minute wave a, but it may yet do so. If price makes a new high above 1,236.56, then this wave count would be favoured. At that stage, minor wave B may be unfolding as a zigzag.
If minor wave B is unfolding as a zigzag, then it may be deep enough to reach 0.9 the length of minor wave A at 1,275.24. If that price point is met, then the target is 1,302 where minute wave c would reach 2.618 the length of minute wave a. Intermediate wave (2) would be a very common expanded flat correction.
Minor wave B does not have to reach the minimum for a flat correction. If upwards movement moves beyond the end of minute wave a at 1,243.69, then as soon as minute wave c could be seen as a complete five wave impulse then it may be over. Minor wave B may be a shallow zigzag and would have to be relabelled minor wave X. Then intermediate wave (2) would be a double zigzag and minor wave X within it could be a shallow zigzag.
Minute wave c must be a five wave structure. Within minute wave c, minuette wave (iv) may not move into minuette wave (i) price territory below 1,223.83.
Considering price behaviour over the last few days, it is my judgement that this wave count has a slightly lower probability than the first hourly chart.
ALTERNATE DAILY ELLIOTT WAVE COUNT
It is technically possible but highly unlikely that intermediate wave (2) is over. This wave count requires confirmation with a five up on the hourly chart for confidence. A new high is not confirmation of this wave count.
If intermediate wave (2) is over, then it is a very brief and shallow 0.31 zigzag lasting only eleven days (intermediate wave (1) lasted 69 days). The probability of this is very low.
At 1,591 intermediate wave (3) would reach 1.618 the length of intermediate wave (1).
Within intermediate wave (3), no second wave correction may move beyond its start below 1,208.32.
I do not want to give too much weight to this alternate by publishing an hourly chart. The subdivisions would be exactly the same as the main hourly chart.
Click chart to enlarge. Chart courtesy of StockCharts.com.
Price is range bound between the pink trend lines, moving sideways. The upper edge is about 1,280 and the lower edge is about 1,210. It should be expected that price will swing from resistance to support and back again, eventually breaking out of the range for the next trend. Only experienced traders should attempt to trade this market while price remains range bound. The rest of us should wait for the next trend to emerge and then join it.
Stochastics may be used in conjunction with support and resistance to indicate each swing. At this stage, price has found support and Stochastics is just returning from oversold. An upwards swing should be expected from here until price finds resistance and Stochastics reaches overbought.
Ignoring the Elliott wave count which sees the end of the last wave up on 4th March, it is difficult to accurately state on which day price entered this current sideways trend. It could be as early as 12th February or as late as 14th March. The earlier date seems more reasonable.
If an earlier date is accepted, then during this sideways movement it is a downwards day which has strongest volume. This indicates a downwards breakout is more likely than upwards, which supports the main Elliott wave count.
ADX is declining indicating the market is not trending; it is consolidating. ATR agrees as it too is declining. Overall volume is declining as price moves sideways. All these indicators are in agreement with price: the market is range bound.
Overall, volume continues to decline as price moves sideways. There was some support for the rise in price on Tuesday, but volume for Tuesday is still light.
RSI is neutral. There is room for price to rise or fall.
On Balance Volume is the one indicator which here is clear. OBV is bearish. This supports the main Elliott wave count which expects more downwards movement overall. OBV moved higher today and is now close to the upper green trend line. This line is close by. If that line serves to hold down any further upwards movement from price, that would support the first hourly chart for the main wave count over the second hourly chart. However, this line may not hold; it is not very technically significant. The orange line has more technical significance.
This analysis is published @ 07:38 p.m. EST.