A small inside day has not clarified which Elliott wave count is correct.
Summary: Downwards movement is most likely but a trend change is unconfirmed. A new low below 1,217.22 would confirm an end to sideways movement and the resumption of the downwards trend. A new high above 1,243.19 would indicate more upward movement first, the target for it to end is at 1,256.
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) has begun and is most likely incomplete. COT supports this wave count; the majority of commercial traders are short (as of 4th April). 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.
At this stage, it looks like intermediate wave (2) may be unfolding as a double zigzag. Minor wave X may be a zigzag within the double.
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.
The dark blue channel is a best fit. If price returns to within the channel, then it should again show where upwards corrections find resistance.
It is possible that minor wave X may continue higher and be deeper. There is no upper invalidation point for minor wave X; X waves may make new price extremes beyond the start of the first structure in the double. If minor wave X continues higher, then intermediate wave (2) would more likely be a combination than a double zigzag. They are very different structures.
While double zigzags should have a slope against the prior trend, combinations should not. They are sideways structures. To achieve this the second structure in the double normally ends close to the same level as the first structure. In this instance, that would see intermediate wave (2) a very shallow correction failing to reach the 0.382 Fibonacci ratio. This is possible, but it has a low probability. This is the risk to the wave count today.
Intermediate wave (2) may not move beyond the start of intermediate wave (1) below 1,046.27.
MAIN HOURLY ELLIOTT WAVE COUNT
Minor wave X may be a zigzag.
Within the zigzag of minor wave X, minute wave b is a 0.98 length of minute wave a. Minute wave c is 1.25 short of equality in length with minute wave a.
Price broke below the cyan line and thereafter is finding resistance at the line. Volume declined as price moved higher. In the short term, this looks like upwards movement to end Friday’s session was a counter trend movement; the rise in price was not supported by volume. The prior fall in price had some support from volume.
If price breaks back below the dark blue line, more confidence may be had in a trend change. Thereafter, a new low below 1,217.22 would invalidate the alternate hourly chart below and confirm this main hourly wave count.
At 1,207 minuette wave (iii) would reach 4.236 the length of minuette wave (i).
The structure for minuette wave (ii) is an expanded flat correction. The subdivisions for this piece of movement have a slightly better fit for this main hourly wave count than the alternate below.
The target remains at 1,131 where intermediate wave (2) would reach the 0.618 Fibonacci ratio of intermediate wave (1).
ALTERNATE HOURLY ELLIOTT WAVE COUNT
Minute wave c is seen as an ending expanding diagonal for both hourly wave counts.
All subwaves must subdivide as zigzags within an ending diagonal. The fourth wave must overlap first wave price territory. Within the final zigzag of minuette wave (b), the structure may be incomplete.
Subminuette wave a fits as an impulse. Subminuette wave b fits as a zigzag, but the proportions between submicro waves (2) and (4) give this part of the wave count not as good a look as the main wave count.
Although subminuette wave b is labelled as over here, it is also possible that it is incomplete. It may continue lower as a double zigzag or sideways as a flat correction.
Within the zigzag, subminuette wave b may not move beyond the start of subminuette wave a below 1,217.22.
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.
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.
As price moves sideways within the range, volume continues to decline. There was no support for the small downwards movement of Friday compared to volume on Thursday.
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 flat indicating the market is still not trending. ATR continues to decline, so these two are in agreement.
RSI is neutral. There is room for price to rise or fall.
The upper green trend line is slightly redrawn on On Balance Volume to sit more accurately on the outermost upper peak within the downwards trend. The break above the upper line saw yesterday isn’t so clear; OBV has now turned downwards for Friday. A break more clearly above the upper green line would be a bullish signal. A clearer bullish signal would come from OBV breaking above the orange line, as this line has stronger technical significance. A break below the light blue line would be a strong bearish signal.
This analysis is published @ 01:07 p.m. EST.