In the short term, a small correction to about 1,325 was expected.
Price moved lower, reaching 1,320.
Summary: The correction still looks like it is over. A short term target for a strong third wave up is at 1,515.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
WEEKLY ELLIOTT WAVE COUNT
This downwards movement labelled super cycle wave (a) subdivides as a double zigzag from the all time high.
Within the first zigzag labelled cycle wave w, primary wave C is 10.13 short of 1.618 the length of primary wave C.
Within the second zigzag labelled cycle wave y, there is no Fibonacci ratio between primary waves A and C. Primary wave C is an ending contracting diagonal which meets all Elliott wave rules.
For this downwards movement this is the only wave count that I have been able to see so far which meets all Elliott wave rules. I remain aware that Elliott Wave International and Danerics have this downwards movement as a five wave impulse which ends with a contracting diagonal for the fifth wave, but that wave count violates the rule for wave lengths within a contracting diagonal. I will keep that wave count in mind, but for now I do not want to publish a wave count which does not meet all Elliott wave rules as laid out in Frost and Prechter.
Grand Super Cycle wave IV may not be a combination because the first wave subdivides as a multiple, and the maximum number of corrective structures within a multiple is three. To label multiples within multiples increases the maximum beyond three, violating the rule.
It may not be a zigzag because Super Cycle wave (a) subdivides as a three and not a five.
This leaves two groups of corrective structures: flats or triangles.
Within an expanded flat or running triangle, Super Cycle wave (b) may make a new high above the start of Super Cycle wave (a) at 1,920.18.
Within a flat, Super Cycle wave (b) must retrace a minimum 90% of Super Cycle wave (a) at 1,833.71.
Within a triangle, there is no minimum nor maximum requirement for Super Cycle wave (b). The only requirement for a B wave within a triangle is it must be a corrective structure.
Super Cycle wave (b) may be any one of 23 possible corrective structures. First, a move of this size should have a clear five up on the daily and weekly charts.
After consideration of how far up this wave has travelled at the weekly chart level, the degree of labelling within the new upwards wave is moved up one degree at the end of this week.
So far there is a five up on the weekly chart that is now labelled primary wave 1. This was followed by a shallow three down labelled primary wave 2, which should be followed by another five up that is for now labelled primary wave 3 but may also be labelled primary wave C.
When this next five up is complete, then an alternate wave count at the weekly chart level would be required. Cycle wave a is most likely to unfold as a five wave structure, but it may also be a three. When a 5-3-5 up is complete, then two wave counts at the weekly chart level would be required: one for cycle wave a as a continuing impulse and the other for cycle wave a as a completed zigzag.
DAILY ELLIOTT WAVE COUNT
Primary wave 2 is a complete expanded flat correction. Price from the low labelled primary wave 2 has now moved too far upwards to be reasonably considered a continuation of primary wave 2. Primary wave 3 is very likely to have begun and would reach 1.618 the length of primary wave 1 at 1,582.
Primary wave 3 may only subdivide as an impulse.
So far intermediate waves (1) and (2) may be complete within primary wave 3. The middle of primary wave 3 may have begun and may also only subdivide as an impulse.
Within intermediate wave (3), the end of minor wave 1 is moved up to the last high. This fits on the hourly chart although it looks odd here on the daily chart. There was a small fourth wave correction up at the end of minor wave 1 and it subdivides on the hourly chart as an impulse. Minor wave 2 may be a complete zigzag, also subdividing as a zigzag on the hourly chart. If minor wave 2 is over, it would be 0.50 the depth of minute wave i.
No second wave correction may move beyond the start of its first wave below 1,310.84 within minor wave 3.
At 1,437 intermediate wave (3) would reach 1.618 the length of intermediate wave (1). If price keeps going upwards through this first target, or if it gets there and the structure is incomplete, then the next target would be at 1,552 where intermediate wave (3) would reach 2.618 the length of intermediate wave (1).
HOURLY ELLIOTT WAVE COUNT
Minute wave ii moved lower, ending just short of the 0.618 Fibonacci ratio of minute wave i. The subdivisions all fit on the five minute chart level. This structure may be a complete zigzag.
A small best fit channel about downwards moment for Friday’s session is breached by upwards movement. The last hour downwards on Friday may be a throwback to support at this trend line.
Risk and the invalidation point must remain the same. If minute wave ii continues lower, then it may not move beyond the start of minute wave i below 1,310.84.
At 1,515 minor wave 3 would reach 1.618 the length of minute wave i. This target fits only with the second higher target for intermediate wave (3) on the daily chart.
Minor wave 3 should have support from rising volume and it should exhibit stronger momentum than minor wave 1.
Intermediate wave (1) lasted a Fibonacci thirteen days. Minor wave 1 lasted a Fibonacci eight days. Minor wave 3 may be expected to last longer, about a Fibonacci thirteen or maybe twenty one days.
Last week completed a bearish engulfing candlestick pattern that was supported by an increase in volume. This bearish reversal pattern indicated a trend change from up to either down or sideways.
This weekly candlestick completes another red candlestick with lighter volume than last week. The fall in price this week was not supported by volume. Volume this week was lightest for six weeks, so this decline is significant. This downwards week looks like a countertrend pullback within a larger upwards trend. The prior rise in price was supported by volume.
The reversal implications of the bearish engulfing candlestick pattern may now be fulfilled. A reversal pattern only indicates a trend change and gives no indication of how far or for how long the next trend should be. It also does not mean a change from up to down or down to up but may also mean a change from up to sideways or down to sideways.
Price may be finding support at the horizontal trend line about 1,310. Two weeks in a row with longer tails on these candlesticks is slightly bullish.
On Balance Volume is not working with the upper purple line, because it broke above the line giving a bullish signal only to turn and break below the line. The lower line so far should provide support if OBV moves lower.
Volume for Friday’s smaller range downwards day is lighter than yesterday’s upwards day and also lighter than the last downwards day. There was not adequate support for the fall in price on Friday, so it is suspicious. It should be expected to most likely be a counter trend pullback.
On Balance Volume at the daily chart level remains constrained between two trend lines. It has not yet broken out to indicate a price direction.
RSI remains neutral. There is plenty of room for price to rise or fall.
This pullback has brought ADX right down from extreme levels. There is again room for a trend to develop. Currently, ADX is still declining, indicating the market is not trending. No trend change is indicated: the +DX line remains above the -DX line. If a trend resumes at this stage, it would be upwards.
ATR is in agreement with ADX as it too is declining.
Stochastics is just short of oversold and price is reasonably short of support. There is still a little room for price to move lower before this pullback is complete. If it does, then this classic analysis would expect price to find support about 1,300.
This analysis is published @ 10:26 p.m. EST.