S&P 500

Last analysis expected for the short term a small amount of downwards movement as most likely to end about 2,892.64. A small downwards day with a low at 2,891.73 fits this expectation almost exactly.

Summary: The trend is up. Assume the trend remains the same until proven otherwise.

The last gap may be a breakaway gap, which may offer support at 2,876.16. Gaps can be useful in trading as a place to set stops.

Stops for long positions may be pulled up to just below 2,876.16.

Primary wave 3 may now be over; but, although there is a little support for this possibility from VIX, there is no reasonable bearish signal from the AD line nor On Balance Volume. Expect that price most likely may continue higher with brief shallow corrections along the way up.

The mid to longer term target is now either 2,950 (Elliott wave) or 3,045 (classic analysis). Another multi week to multi month correction is expected at one of these targets.

The final target for this bull market to end remains at 3,616.

The biggest picture, Grand Super Cycle analysis, is here.

Last historic analysis with monthly charts is here, video is here.

ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

Cycle wave V must complete as a five structure, which should look clear at the weekly chart level and also now at the monthly chart level. It may only be an impulse or ending diagonal. At this stage, it is clear it is an impulse.

Within cycle wave V, the third waves at all degrees may only subdivide as impulses.

Intermediate wave (4) has breached an Elliott channel drawn using Elliott’s first technique. The channel is redrawn using Elliott’s second technique: the first trend line from the ends of intermediate waves (2) to (4), then a parallel copy on the end of intermediate wave (3). Intermediate wave (5) may end either midway within the channel, or about the upper edge.

There is perfect alternation and excellent proportion between intermediate waves (2) and (4).

Within intermediate wave (5), no second wave correction may move beyond the start of its first wave below 2,594.62. However, the lower edge of the black Elliott channel drawn across the ends of intermediate degree waves should provide very strong support for any deeper pullbacks, holding price well above the invalidation point while intermediate wave (5) unfolds.

At this stage, the expectation is for the final target to me met in October 2019. If price gets up to this target and either the structure is incomplete or price keeps rising through it, then a new higher target would be calculated.

A multi week to multi month consolidation for primary wave 4 is expected on the way up to the final target. This large correction may now be fairly close by in terms of time; classic analysis will be watched carefully to identify early warning signs of its approach.

The last bullish fifth wave of minor wave 5 to end intermediate wave (3) exhibited commodity like behaviour. It was strong and sustained. It is possible that minor wave 5 to end intermediate wave (5) to end primary wave 3 may exhibit similar behaviour, so we should be on the lookout for this possibility. This may be beginning to happen now.

DAILY CHART

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Intermediate wave (5) avoided a truncation now that it has a slight new high above the end of intermediate wave (3) at 2,872.87.

Intermediate wave (3) exhibits no Fibonacci ratio to intermediate wave (1). It is more likely then that intermediate wave (5) may exhibit a Fibonacci ratio to either of intermediate waves (1) or (3). Intermediate wave (5) has passed equality in length with intermediate wave (1). The next target was at 1.618 the length of intermediate wave (1), which may have been almost met.

Intermediate wave (5) is unfolding as an impulse, and within it minor waves 1 through to 4 may now all be complete.

The channel is drawn about intermediate wave (5) using Elliott’s first technique. Price has closed above the upper edge.

Minor wave 5 is developing some commodity like behaviour.

Assume the upwards trend remains intact while price remains above 2,802.49. The trend remains the same until proven otherwise.

It is possible that primary wave 3 was over at this week’s high and primary wave 4 has just begun. However, a new low below 2,802.49 is required for any confidence whatsoever in this view.

TECHNICAL ANALYSIS

WEEKLY CHART

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The symmetrical triangle may now be complete. The base distance is 340.18. Added to the breakout point of 2,704.54 this gives a target at 3,044.72. This is above the Elliott wave target at 2,950, so the Elliott wave target may be inadequate.

A new all time high for price has support from another new all time high from On Balance Volume at the weekly chart level. This is bullish.

Price can rise in current market conditions on light and declining volume for a reasonable period of time, so lighter volume last week does not mean that the rise in price is unsustainable for the short or mid term.

Another upwards gap this week may be a measuring gap; it should be assumed to be so until proven otherwise. While this gap remains open, it may be useful in calculating a new short term target at 2,992. If this gap is closed, it may then be considered an exhaustion gap, and that may be taken as a signal that primary wave 4 may have arrived.

This weekly candlestick closes as a Shooting Star. From Steve Nison CMT in “Japanese Candlestick Charting Techniques”, page 74:

“The Japanese aptly say that the shooting star shows trouble overhead. Since it is one session, it is usually not a major reversal signal as is the bearish engulfing pattern or evening star. Nor do I view the shooting star as pivotal resistance as I do with the two previously mentioned patterns.”

This weekly candlestick is a small warning; it may not be read as a reversal signal.

DAILY CHART

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Since the low on the 2nd of April, 2018, price has made a series of higher highs and higher lows. This is the definition of an upwards trend. But trends do not move in perfectly straight lines; there are pullbacks and bounces along the way.

Breakaway and measuring gaps can be useful in trading: stops may be adjusted using these gaps. If the last gap is closed, then it would not be a breakaway gap but would then correctly be an exhaustion gap, so a reasonable correction would be expected and long positions should then be closed. If the last gap is closed, that may be taken as a signal that primary wave 3 may be over and primary wave 4 may have arrived.

Current market conditions with price rising on declining volume and low ATR may be sustained even while upwards momentum increases. This has happened before; most recently up to the high of the 26th of January, so it may happen again.

The trend is up, and it looks like it is strengthening. ADX has now indicated an upwards trend; when rising from low levels and coming up from both directional lines, this is the strongest signal ADX can give.

RSI can reach further into overbought when the S&P has a strong trend. Stochastics may remain overbought for a reasonable period of time.

At this stage, there is no candlestick reversal pattern to support the idea of primary wave 4 arriving, but it must be noted that on the daily chart intermediate wave (4) was not heralded by a candlestick reversal pattern.

Friday’s session moved price lower, but the balance of volume was upwards and the candlestick has closed green. Upwards movement within Friday’s session has support from rising volume.

VOLATILITY – INVERTED VIX CHART

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.

To keep an eye on the all time high for inverted VIX a weekly chart is required at this time.

Notice how inverted VIX has very strong bearish signals four weeks in a row just before the start of the last large fall in price. At the weekly chart level, this indicator may be useful again in warning of the end of primary wave 3.

At this time, there is mid term bearish divergence between price and inverted VIX: price has made a new all time high, but inverted VIX has not. This divergence may persist for some time and may remain at the end of primary wave 3.

There is single and weak short term bearish divergence between price and inverted VIX: this week price moved higher, but inverted VIX moved lower. Price has not come with a normal corresponding decline in market volatility although it has made new all time highs this week; volatility has increased. This may be an early warning that primary wave 4 could begin here or fairly soon. It is possible that more instances of weekly divergence may yet develop before primary wave 4 begins.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com. So that colour blind members are included, bearish signals
will be noted with blue and bullish signals with yellow.

Normally, volatility should decline as price moves higher and increase as price moves lower. This means that normally inverted VIX should move in the same direction as price.

There is mid term divergence with a new all time high from price not supported by a corresponding new all time high from inverted VIX. This divergence is bearish.

Inverted VIX has made a new low below the low six sessions prior, but price has not. This divergence is bearish and strong. However, it is also possible that this is only an early warning and that further bearish divergence may develop before primary wave 4 begins; inverted VIX may not be very useful as a timing tool, only a warning.

There is now a small cluster of bearish signals from inverted VIX, which offer a very small support to the idea that primary wave 4 may begin here or very soon.

Friday’s session saw price move lower, but inverted VIX move higher. This divergence is bullish and supports the idea of new all time highs early next week.

BREADTH – AD LINE

WEEKLY CHART

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When primary wave 3 comes to an end, it may be valuable to watch the AD line at the weekly time frame as well as the daily.

The AD line and price both moved higher to new all time highs this week; there is no divergence. The rise in price has support from rising market breadth. This is bullish.

DAILY CHART

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There is normally 4-6 months divergence between price and market breadth prior to a full fledged bear market. This has been so for all major bear markets within the last 90 odd years. With no longer term divergence yet at this point, any decline in price should be expected to be a pullback within an ongoing bull market and not necessarily the start of a bear market. New all time highs from the AD line means that any bear market may now be an absolute minimum of 4 months away. It may of course be a lot longer than that. My next expectation for the end of this bull market may now be October 2019.

Breadth should be read as a leading indicator.

Very weak bearish divergence noted in last analysis has now been followed by a very little downwards movement. It may now be resolved.

Friday’s session saw price moved slightly lower and the AD line move slightly higher. This is short term bullish divergence.

All of small, mid and large caps made new all time highs on the 27th of August. There is a little divergence here in breadth with large caps continuing to make new all time highs on the 29th of August and small and mid caps lagging.

DOW THEORY

The following lows need to be exceeded for Dow Theory to confirm the end of the bull market and a change to a bear market:

DJIA: 23,360.29.

DJT: 9,806.79.

S&P500: 2,532.69.

Nasdaq: 6,630.67.

Nasdaq and DJT and now the S&P500 have all made recent new all time highs. For Dow Theory confirmation of the ongoing bull market, DJIA needs to make a new all time high.

ANALYSIS OF THE END OF INTERMEDIATE WAVE (3)

TECHNICAL ANALYSIS

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This chart looked overly bullish at the end of intermediate wave (3). The only warning in hindsight may have been from volume spiking slightly on downwards days. There was no bearish divergence between price and either of RSI or On Balance Volume.

Single bearish divergence between price and Stochastics was weak, which is often an unreliable signal.

VIX

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The strongest warning of an approaching intermediate degree correction at the daily chart level came from inverted VIX.

There was strong double bearish divergence at the high of intermediate wave (3), which is noted by the vertical line. There was also a sequence of five days of bearish divergence, days in which price moved higher but inverted VIX moved lower.

AD LINE

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There was only single bearish divergence between price and the AD line at the end of intermediate wave (3). Approaching the high, there were no instances of price moving higher and the AD line moving lower.

Conclusion: When studying the behaviour of price and these indicators just before the start of intermediate wave (4), we may see some clues for warning us of primary wave 4. A cluster of bearish signals from VIX along with a bearish divergence from price and the AD line or On Balance Volume may warn of primary wave 4. The next instance will probably not behave the same as the last, but there may be similarities.

At this time, it does not look like primary wave 4 may begin right now, but we need to be aware of its approach.

GOLD

Price remains range bound. All Elliott wave counts remain valid.

This week’s GDX analysis may indicate which Elliott wave count may be more likely for Gold.

Summary: Analysis of GDX, which is bearish, supports the combination wave count for Gold; with confidence in the analysis of GDX, the combination wave count has a higher probability.

It looks like Gold may now continue lower next week towards a target at 1,132.

If price turns upwards and breaks above the upper edge of the channel on the daily charts, then expect a continuation of upwards movement to last several weeks and reach about 1,305 – 1,310.

Grand SuperCycle analysis is here.

Last historic analysis with monthly charts and several weekly alternates is here, video is here.

Weekly charts will all again be reviewed at the end of this week. They are published in order of probability based upon classic technical analysis.

MAIN ELLIOTT WAVE COUNT

WEEKLY CHART – COMBINATION

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There are four remaining weekly wave counts at this time for cycle wave b: a triangle, flat, combination or double zigzag.

All four weekly wave counts are again considered at the end of this week. Only two shall be followed on a daily basis.

At this stage, this wave count may have a slightly higher probability than the other three weekly wave counts because it has more support from classic technical analysis.

If cycle wave b is a combination, then the first structure in a double may be a complete zigzag labelled primary wave W.

The double may be joined by a three in the opposite direction, a zigzag labelled primary wave X.

The second structure in the double may be a flat correction labelled primary wave Y. My research on Gold so far has found that the most common two structures in a double combination are one zigzag and one flat correction. I have found only one instance where a triangle unfolded for wave Y. The most likely structure for wave Y would be a flat correction by a very wide margin, so that is what this wave count shall expect.

Within a flat correction for primary wave Y, the current downwards wave of intermediate wave (B) may be a single or multiple zigzag; for now it shall be labelled as a single. Intermediate wave (B) must retrace a minimum 0.9 length of intermediate wave (A) at 1,147.34. Intermediate wave (B) may move beyond the start of intermediate wave (A) as in an expanded flat.

Because the minimum requirement for intermediate wave (B) is not yet met, this wave count requires that minute wave v of minor wave C of intermediate wave (B) continues lower. This is the most immediately bearish of all four weekly wave counts.

When intermediate wave (B) is complete, then intermediate wave (C) would be expected to make at least a slight new high above the end of intermediate wave (A) at 1,365.68 to avoid a truncation. Primary wave Y would be most likely to end about the same level as primary wave W at 1,374.91, so that the whole structure takes up time and moves price sideways, as that is the purpose of double combinations.

While double combinations are very common, triples are extremely rare. I have found no examples of triple combinations for Gold at daily chart time frames or higher back to 1976. When the second structure in a double is complete, then it is extremely likely (almost certain) that the whole correction is over.

DAILY CHART – COMBINATION

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Intermediate wave (B) may be unfolding lower as either a single or double zigzag. At this stage, a single zigzag will be considered; the expected direction nor minimum requirement at 1,147.34 do not differ from a double zigzag.

If intermediate wave (B) is unfolding as a single zigzag, then within it minor wave C must subdivide as a five wave impulse. The labelling today is changed now to see minute wave iii over at the last low and the last bounce as minute wave iv.

It is possible that minute wave iv is now complete as a relatively brief and shallow zigzag. It is also possible that it may continue sideways for another one to few weeks as a flat, combination or triangle. Minute wave iv may not move into minute wave i price territory above 1,282.20.

WEEKLY CHART – TRIANGLE

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The triangle so far has the best fit and look, but at this stage it no longer has good support from classic technical analysis of the last two weeks price movement. It is now judged to have a slightly lower probability than the combination wave count.

Cycle wave b may be an incomplete triangle. The triangle may be a contracting or barrier triangle, with a contracting triangle looking much more likely because the A-C trend line does not have a strong slope. A contracting triangle could see the B-D trend line have a stronger slope, so that the triangle trend lines converge at a reasonable rate. A barrier triangle would have a B-D trend line that would be essentially flat, and the triangle trend lines would barely converge.

Within a contracting triangle, primary wave D may not move beyond the end of primary wave B below 1,123.08. Within a barrier triangle, primary wave D may end about the same level as primary wave B at 1,123.08, so that the B-D trend line is essentially flat. Only a new low reasonably below 1,123.08 would invalidate the triangle.

Within both a contracting and barrier triangle, primary wave E may not move beyond the end of primary wave C above 1,365.68.

Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. Primary wave C is the most common sub-wave to subdivide as a multiple, and this is how primary wave C for this example fits best.

Primary wave D must be a single structure, most likely a zigzag.

There are no problems in terms of subdivisions or rare structures for this wave count. It has an excellent fit and so far a typical look.

A channel is drawn on all charts about the downwards wave of primary wave D. Here, it is labelled a best fit channel. If this channel is breached by upwards movement, that may provide reasonable confidence in this weekly triangle wave count and the double zigzag count, and put serious doubt on the combination and flat wave counts.

This wave count now expects a consolidation for primary wave E to back test resistance at prior support, and then a significant new downwards wave for cycle wave C. For the long term, this is the most bearish wave count.

DAILY CHART – TRIANGLE

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Primary wave D may again be complete. For Barchart data, there is a Morning Doji Star candlestick reversal pattern at the low.

For confidence, this wave count now requires a breach of the upper edge of the blue best fit channel. This channel is drawn the same way on all weekly and daily charts, all on a semi-log scale.

Upwards movement to the high is labelled minor wave 1. However, this upwards movement looks very strongly like a three wave structure at the daily chart level, which does not support this wave count this week.

A target for primary wave E is the strong zone of resistance about 1,305 to 1,310. Primary wave E is most likely to subdivide as a zigzag (although it may also subdivide as a triangle to create a rare nine wave triangle), and it should last at least a Fibonacci 13 weeks. Primary wave E may not move beyond the end of primary wave C above 1,365.68.

WEEKLY CHART – FLAT

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It is possible that cycle wave b may be a flat correction. Within a flat correction, primary wave B must retrace a minimum 0.9 length of primary wave A at 1,079.13 or below. Primary wave B may make a new low below the start of primary wave A at 1,046.27 as in an expanded flat correction.

Only a new low reasonably below 1,123.08 would provide reasonable confidence in this wave count.

Intermediate wave (C) must subdivide as a five wave structure; it may be unfolding as an impulse. Within intermediate wave (C), minor waves 1, 2 and now 3 may be complete. A consolidation to last about 5 to 13 weeks may now develop for minor wave 4. Minor wave 4 may not move into minor wave 1 price territory above 1,307.09.

This wave count differs from the triangle wave count in that it expects a possibly more brief and more shallow correction to unfold here.

The blue channel here is drawn using Elliott’s first technique. Minor wave 4 would be most likely to remain contained within this channel, and may find resistance about the upper edge if it gets there. A strong breach of this channel by upwards movement would reduce the probability of this wave count.

Minor wave 2 was a double zigzag lasting nine weeks. To exhibit alternation and reasonable proportion minor wave 4 may be a flat, combination or triangle and may last a little longer than nine weeks as these types of corrections can be longer lasting than zigzags or zigzag multiples.

WEEKLY CHART – DOUBLE ZIGZAG

Click chart to enlarge.

Finally, it is also possible that cycle wave b may be a double zigzag or a double combination.

The first zigzag in the double is labelled primary wave W. This has a good fit.

The double may be joined by a corrective structure in the opposite direction, a triangle labelled primary wave X. The triangle would be about two thirds complete.

Within the triangle of primary wave X, intermediate wave (C) may now be complete. It may not move beyond the end of intermediate wave (A) below 1,123.08. The A-C trend line for both a barrier and contracting triangle should have some reasonable slope. For the triangle of primary wave X to have the right look, intermediate wave (C) should end here or very soon indeed.

This wave count may now expect choppy overlapping movement in an ever decreasing range for several more months. After the triangle is complete, then an upwards breakout would be expected from it.

Primary wave Y would most likely be a zigzag because primary wave X would be shallow; double zigzags normally have relatively shallow X waves.

Primary wave Y may also be a flat correction if cycle wave b is a double combination, but combinations normally have deep X waves. This would be less likely.

This wave count has good proportions and no problems in terms of subdivisions.

TECHNICAL ANALYSIS

WEEKLY CHART

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On Balance Volume is lower than its prior point at the end of November 2015. This divergence is extremely bearish but does not rule out a consolidation unfolding here; the divergence does strongly support the Triangle wave count, which expects a consolidation or bounce up to test resistance now and then a continuation of a major bear market. It could also support the flat wave count that allows for a new low below 1,046.27 in coming months.

When Gold has a strong trend, ADX may remain very extreme for long periods of time and RSI can move more deeply into oversold. However, most recent lows since November 2015 were all found when RSI just reached oversold, so some caution here in looking out for a possible consolidation or trend change would be reasonable.

The last week is inconclusive. Price moved higher, but the balance of volume was downwards and the candlestick closed red. The short term volume profile remains bearish, which supports the idea of more downwards movement shortly.

If price does continue lower, then look for next support about 1,140.

DAILY CHART

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Support below is now about 1,140.

When a trend is very extreme, it is time to look out for candlestick reversal patterns and a possible trend reversal to the opposite direction, or a reasonable sideways move to relieve extreme conditions. Here, there is a Hammer reversal pattern at the low (it is almost a Dragonfly doji, but there is a little too great an upper shadow for that pattern). This is a warning that a low may now be in place.

The short term volume profile remains slightly bearish with some support for downwards movement.

The last small bounce has relieved extreme oversold conditions. There is again room for price to fall.

A low in place may now only be seriously considered if the channel on the Elliott wave counts is breached by upwards movement.

GDX WEEKLY CHART

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GDX is now moving lower exactly as expected.

After a breakout, a technical principle is the longer that price consolidates sideways the longer the resulting trend may be expected to be. Also, the longer that price meanders sideways the more energy may be released after a breakout. This is what is happening now for GDX.

The target for this downwards trend to end is calculated using the measured rule. The widest part of the consolidation is added to the breakout point at 20.80 giving a target at 16.02. That is not yet met.

At the weekly chart level, there is a clear downwards breakout with a breakaway gap. As breakaway gaps should not be closed, they may be used to set stops that may be set just above a downwards breakaway gap.

The last weekly candlestick is bearish with a long upper wick and a close near the low for the week. A lack of support from volume is not a concern as price can continue to fall of its own weight.

The bullish divergence between price and On Balance Volume noted with green trend lines is also not a strong signal. On Balance Volume is a leading indicator; when it leads, it offers a signal, but it does not always lead price.

GDX DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

GDX has now closed below support on a strong downwards day with support from volume. New lows are the lowest for GDX since December 2016. This is extremely significant for GDX.

GDX is in a downwards trend. Bounces and consolidations may be used as opportunities to join the trend. The last small bounce looks now to be over.

The last measuring gap may provide resistance. A closure of this gap with a new high above 19.74 would be significant; at that stage, it would not be a measuring gap but an exhaustion gap. Assume it is a measuring gap, until proven otherwise.

Looking back over the last 3 1/2 years at GDX, at the daily chart level, I see it can reach extreme levels and remain there while price continues to move a reasonable distance. Only when it has reached very extreme and then exhibits strong divergence may an end to a strong trend be indicated. I would advise members trading GDX at this time to take some time to look over price action of the last few years, with ADX and RSI especially, and study carefully what happened towards at the end of strong trends.

Please remember to protect your trading accounts by careful risk management. Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

A possible target for this downwards trend to end may be now calculated using the measured rule, giving a target about 16.02.

US OIL

Last week’s analysis expected an upwards week as price swings from support up to resistance.

Summary: The Elliott wave structure for intermediate wave (4) does not look complete. It may continue sideways now for another 7 weeks.

For the short term, it looks like upwards movement may halt about here and a small zigzag down may unfold next week. However, there is no reversal signal at this week’s high, so it must be accepted that the upwards swing may not end here; if it continues, it could make a new high above 75.26 but the first target is at 73.10.

The larger trend remains upwards, so pullbacks may be used as opportunities to join the trend.

MAIN WAVE COUNT

MONTHLY CHART

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The bear market for US Oil looks to be over and a new bull market looks to be in its early stages. The prior bearish wave count has been invalidated, leaving only this very bullish wave count.

A huge zigzag down to the last low may be complete and is labelled here Super Cycle wave (II).

Cycle wave b must be seen as complete in August 2013 for this wave count to work. It cannot be seen as complete at the prior major swing high in May 2011.

Cycle wave b is seen as a zigzag, and within it primary wave B is seen as a running contracting triangle. These are fairly common structures, although nine wave triangles are uncommon. All subdivisions fit.

Primary wave C moves beyond the end of primary wave A, so it avoids a truncation. But it does not have to move above the price territory of primary wave B to avoid a truncation, which is an important distinction.

If cycle wave b begins there, then cycle wave c may be seen as a complete five wave impulse.

Super Cycle wave (III) must move beyond the end of Super Cycle wave (I). It must move far enough above that point to allow room for a subsequent Super Cycle wave (IV) to unfold and remain above Super Cycle wave (I) price territory.

Cycle wave I may be incomplete. It may be unfolding as an impulse and may have now moved through the middle portion. Commodities have a tendency to exhibit swift strong fifth waves, and this tendency is especially prevalent for third wave impulses. Intermediate wave (5) to end primary wave 3 may be very swift and strong, ending with a blow off top.

When cycle wave I is complete, then cycle wave II may be a deep correction that may not move beyond the start of cycle wave I below 26.06.

Data from FXCM for USOil does not go back to the beginning of Super Cycle wave (I). Without an accurate known length of Super Cycle wave (I) a target cannot be calculated for Super Cycle wave (III) to end using Fibonacci ratios. The target for Super Cycle wave (III) may be calculated when cycle waves I, II, III and IV within it are complete. That cannot be done for many years.

WEEKLY CHART

Click chart to enlarge.

Intermediate wave (3) may now be complete. There is no Fibonacci ratio between intermediate waves (1) and (3), and intermediate wave (3) is longer than 1.618 the length of intermediate wave (1).

This wave count fits with classic technical analysis at the monthly and daily chart levels.

Intermediate wave (2) was a deep double zigzag. Given the guideline of alternation, intermediate wave (4) may be expected to most likely be a shallow flat, triangle or combination. It may be about even in duration with intermediate wave (2), or it may be a little longer because triangles and combinations are more time consuming structures.

Intermediate wave (4) has now lasted 14 weeks. At the daily chart level, at this stage, I cannot see it as a complete corrective structure. The next expectation will now be for it to possibly complete in a further 7 weeks to total a Fibonacci 21. It may not exhibit a Fibonacci duration though (this is a rough guideline only).

Intermediate wave (4) may find support about the lower edge of the black Elliott channel. It may end within the price territory of the fourth wave of one lesser degree; minor wave 4 has its territory from 66.65 to 59.13.

At this stage, only two structural options fit for intermediate wave (4) at the daily chart level: a triangle and a combination. They are both equally valid and have about an even probability.

Because the last wave down to support, ending on the 16th of August, now looks like a complete structure and will only subdivide as a three, it cannot be wave C of a flat correction. For this reason, a flat correction at this time does not fit and has been discarded.

COMBINATION

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Intermediate wave (4) may be unfolding as a double combination.

The first structure in a double combination may be a complete zigzag labelled minor wave W. There is a little disproportion within minute wave a between the corrections of minuette waves (ii) and (iv), but this is slight enough to be acceptable for this market.

The double is joined by a complete three in the opposite direction, a zigzag labelled minor wave X. X waves within combinations have no minimum nor maximum allowable length, and may make new price extremes beyond the start of wave W as this one does. The only guideline in terms of depth for X waves is that they are normally very deep.

The second structure in a double combination would most likely be a flat correction as the two most common structures in a double combination are one zigzag and one flat.

Within a possible flat correction for minor wave Y, minute wave a looks like a completed three. Minute wave b must now retrace a minimum 0.9 length of minute wave a, and it may move beyond the start of minute wave a as in an expanded flat. Minute wave b should exhibit clear weakness, should exhibit lack of support from volume, and at its end should exhibit some divergence between price and either or both of Stochastics and RSI.

Minute wave b may be subdividing as a single zigzag as labelled, or it may continue as a double zigzag. Both of these structures usually have sharp corrections with steep slopes; they both have the same look.

When minute wave b is complete, then minute wave c would need to end at least slightly below the end of minute wave a at 64.43 to avoid a truncation.

The purpose of the second structure in a double combination is to take up time and move price sideways. To achieve this purpose minor wave Y would be most likely to end about the same level as minor wave W about 63.60.

TRIANGLE

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Intermediate wave (4) may be unfolding as a triangle.

Minor wave A is seen as a single zigzag, which has a reasonable look. Minor wave B is also seen as a single zigzag.

Minor wave C may have been a complete double zigzag, which has a very good fit. C waves are the most common triangle sub-waves to subdivide as a multiple, so this labelling fits with a common pattern.

Minor wave D may now be a complete zigzag that has some support this week from classic technical analysis. However, there is no sign of a reversal here, so it must be accepted that minor wave D may also move higher. If it does continue higher, then a reasonable target for it to end would be at 73.10 where minute wave c would reach equality in length with minute wave a. This target would still see the B-D trend line have a reasonable slope and the triangle would have the right look.

Minor wave D within a contracting triangle may not move beyond the end of minor wave B above 75.26. The A-C trend line has a shallow slope, so the upper B-D trend line should have a reasonable slope for the triangle trend lines to have a reasonable rate of convergence. A contracting triangle would have a sloping B-D trend line, so this looks most likely.

Minor wave D within a barrier triangle may end about the same level as minor wave B at about 75.26, so that the B-D trend line is essentially flat. A barrier triangle here would not produce triangle trend lines that converge at a reasonable rate. This would not have the right look. A barrier triangle looks unlikely.

When minor wave D is a complete zigzag, then a final zigzag down for minor wave E would most likely end reasonably short of the A-C trend line. Minor wave E may not move beyond the end of minor wave C below 64.43.

TECHNICAL ANALYSIS

MONTHLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The short term volume profile is bearish: the strongest month in the last few months was the downwards month of May (where the balance of volume was down) and now June shows a decline in volume, so volume has not supported upwards movement here.

July and now also August saw another red monthly candlestick with the balance of volume downwards, but the market fell of its own weight; it was not supported by volume. This is not necessarily bullish, but it does point to a consolidation as somewhat more likely here.

For the short term, On Balance Volume is also slightly bearish. This supports the idea that price may be within a correction and not necessarily a continuation of the larger upwards trend.

However, it is entirely possible that this situation could reverse and volume could start to support upwards movement, as has happened back in January 2018.

The larger trend is upwards.

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

With declining volume now with upwards movement and On Balance Volume at resistance, it looks like upwards movement may end here.

A break above resistance here may favour the combination Elliott wave count.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

On Balance Volume may now find resistance at the yellow line. A break above this line would be a weak bullish signal. The line has only been tested three times, so it holds only weak technical significance.

With weak volume and Stochastics overbought and On Balance Volume at weak resistance, the upwards swing may end here. Or a sideways consolidation within the upwards swing may unfold before the swing can continue higher to resistance about 75.25.

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