Sideways movement continues to complete a small pennant pattern. The Elliott wave count remains the same.
Summary: A sideways consolidation is now expected for a fourth wave to continue for another few sessions. It may be very shallow, with support about 1,277 and resistance about 1,297. The breakout is expected to be upwards, and the resulting movement may be surprisingly short and brief.
The final target for this bounce to end is about 1,305 – 1,310.
New updates to this analysis are in bold.
Grand SuperCycle analysis is here.
Last historic analysis with monthly charts is here.
Only two remaining wave counts have a reasonable probability and are published below: a triangle (the preferred wave count) and a double zigzag.
MAIN ELLIOTT WAVE COUNT
WEEKLY CHART – TRIANGLE
Click chart to enlarge.
Cycle wave b may be an incomplete regular contracting triangle. Primary wave E may not move beyond the end of primary wave C above 1,365.68.
Within primary wave E, intermediate waves (A) and (B) may be complete. Intermediate wave (C) must subdivide as a five wave structure. Within intermediate wave (C), minor wave 4 may not move into minor wave 1 price territory below 1,241.88.
Four of the five sub-waves of a triangle must be zigzags, with only one sub-wave allowed to be a multiple zigzag. 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 E looks like it is unfolding as a single 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.
When primary wave E is a complete three wave structure, then this wave count would expect a cycle degree trend change. Cycle wave c would most likely make new lows below the end of cycle wave a at 1,046.27 to avoid a truncation.
It is possible now that primary wave E may end in January or February 2019. Some reasonable weakness should be expected at its end. Triangles often end with declining ATR, weak momentum and weak volume.
DAILY CHART – TRIANGLE
Click chart to enlarge.
Primary wave E may now be nearing its final stages for this wave count.
Primary wave E should subdivide as a zigzag. Intermediate waves (A) and (B) may now be complete. Intermediate wave (C) may now be nearing completion.
Minor wave 2 is a deep 0.75 zigzag. Minor wave 4 may be expected to most likely be a shallow sideways flat, triangle or combination.
Minor wave 3 exhibits the most common Fibonacci ratio to minor wave 1.
Minor wave 4 may not move into minor wave 1 price territory below 1,241.88.
A target for primary wave E is the strong zone of resistance about 1,305 to 1,310. Primary wave E may not move beyond the end of primary wave C above 1,365.68.
HOURLY CHART
Click chart to enlarge.
It will be essential at this time to be flexible because there are several possible structures for minor wave 4, so the labelling within it will change as it unfolds; alternate wave counts may be required. The focus should not be on identifying each small swing within minor wave 4. The focus should be on identifying when its structure may be complete and then the trend may resume.
This first hourly chart considers a triangle for minor wave 4. The triangle may be either a regular contracting triangle, which is the most common type, or a regular barrier triangle. My research shows that barrier triangles are more often running than regular.
Minute wave c may not move beyond the end of minute wave a below 1,277.14.
For a contracting triangle, minute wave d may not move beyond the end of minute wave b above 1,296.77.
For a barrier triangle, minute wave d may end about the same level as minute wave b, and in practice may move very slightly above minute wave b at 1,296.77. A triangle would remain valid as long as the b-d trend line remains essentially flat.
The final sub-wave of minute wave e may not move beyond the end of minute wave c.
A triangle may take another few sessions to complete.
If a triangle is invalidated with a new high reasonably above 1,296.77 or a new low below 1,277.14, then the alternate hourly wave count below may be used.
The triangle trend lines are drawn as they may sit when the triangle is complete. Elliott wave triangles often test their trend lines within the triangle subwaves. The upper b-d trend line may now have two tests within minute wave c, and the lower a-c trend line may now have two tests within minute wave b.
Look for price to continue now to find resistance and support at these trend lines. When the structure may be complete, then a breakout above the b-d trend line would be expected. It may be swift.
HOURLY CHART ALTERNATE
Click chart to enlarge.
A possible zigzag is also considered for minor wave 4.
Within the zigzag, minute wave b may be a complete regular contracting triangle. If minuette wave (e) continues any higher, it may not move beyond the end of minuette wave (c) above 1,295.44.
If the triangle is a B wave within a zigzag, then the breakout would be expected to be downwards.
The downwards breakout for this alternate wave count would be expected to be false and brief. As soon as minute wave c has moved below the end of minute wave a at 1,277.14, it would then avoid a truncation. This wave count would then expect a quick reversal.
A target for minor wave 4 is calculated at two degrees.
WEEKLY CHART – DOUBLE ZIGZAG
Click chart to enlarge.
It is 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 three quarters complete.
Within the triangle of primary wave X, intermediate wave (C) should be complete. Within intermediate wave (D), minor waves A and B may be complete. Minor wave C must subdivide as a five wave structure. Within minor wave C, minute wave iv may not move into minute wave i price territory below 1,241.88.
Intermediate wave (D) would most likely subdivide as a single zigzag.
This wave count may now expect choppy overlapping movement in an ever decreasing range for a few more months.
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
Click chart to enlarge. Chart courtesy of StockCharts.com.
The spinning top candlestick pattern is not a reversal pattern. This puts the short-term trend from up to neutral.
Volume for the last two weeks supports upwards movement. ADX indicates a potential trend change to upwards, but as yet it does not indicate a new trend at this time frame.
DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A small pennant pattern may be forming. These are reliable continuation patterns. The target using the flag pole beginning at 1,236.50 on the 14th of December 2018 would be about 1,360. This is substantially higher than the Elliott wave count suggests; this target may be too optimistic.
The mid-term Fibonacci 55 day moving average has crossed above the long-term 200 day moving average. This is bullish. If the 200 day average turns up to have a positive slope, that would give a full bore bullish look, but that has not happened yet.
GDX WEEKLY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
GDX is now firmly back within a prior consolidation zone. Strong support may be expected again about 20.80.
GDX DAILY CHART
Click chart to enlarge. Chart courtesy of StockCharts.com.
A small flag pattern may be unfolding. The target using the flag pole beginning at 19.80 on the 19th of December 2018 is about 22.93.
Published @ 09:33 p.m. EST.
—
Careful risk management protects your trading account(s).
Follow my two Golden Rules:
1. Always trade with stops.
2. Risk only 1-5% of equity on any one trade.
Main preferred hourly chart updated:
Minute wave c may end within the next 24 hours.
Then minute waves d and e may still need to complete. This may take still another two to four sessions.
Triangles require patience.
Only if price breaks reasonably above 1,296.77 may the triangle be considered complete, as per an alternate published below in response to Nick’s comment.
Otherwise, allow for it to continue further.
Members may like to take long positions when price is at support about the lower edge of the triangle trend line. Risk is at 1,277.14. Reward about 1,310 possibly. It may be about a 2:1 ratio. It’s up to each individual member to judge if that is acceptable or not.
Remember, always manage risk diligently. It is the single most important factor in trading, and the one which differentiates professional traders from all the rest. Follow my two golden rules for risk management that I publish in every post on purpose.
I think Minor 4 is over now and up we pop for minor 5
It’s possible, yes. I’ll publish this as an alternate… maybe.
But when EW triangles finish the following movement is almost always quite sharp. There isn’t a sharp upwards movement happening right now.
If minor 4 were to be complete, it could look like this: