Last week’s main Elliott wave count expected overall downwards movement. Price has moved sideways in a small range.

Summary: Overall, downwards movement is still expected for the next few weeks, which is likely to be choppy and overlapping.

New updates to this analysis are in bold

MONTHLY ELLIOTT WAVE COUNT

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Within the bear market, cycle wave b is seen as ending in May 2011. Thereafter, a five wave structure downwards for cycle wave c begins.

Primary wave 1 is a short impulse lasting five months. Primary wave 2 is a very deep 0.94 zigzag lasting 22 months. Primary wave 3 is a complete impulse with no Fibonacci ratio to primary wave 1. It lasted 30 months.

Primary wave 4 is likely to exhibit alternation with primary wave 2. Primary wave 4 is most likely to be a flat, combination or triangle. Within all of these types of structures, the first movement subdivides as a three.

Primary wave 4 is likely to end within the price territory of the fourth wave of one lesser degree; intermediate wave (4) has its range from 42.03 to 62.58.

Primary wave 4 may end if price comes up to touch the upper edge of the maroon channel. The upper edge of this channel has been pushed up to sit on the end of intermediate wave (2) within primary wave 3.

Primary wave 4 is most likely to be shallow to exhibit alternation in depth with primary wave 2. So far it has passed the 0.382 Fibonacci ratio at 45.52. It may now move mostly sideways in a large range.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

DAILY ELLIOTT WAVE COUNT

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Intermediate wave (A) may be complete as a double zigzag. The best fit channel about intermediate wave (A) has now been breached by downwards movement. This may indicate a trend change.

If intermediate wave (A) is a three, then intermediate wave (B) is most likely to be a very deep correction. It may make a new low below the start of intermediate wave (A) at 26.06.

If primary wave 4 is to be a flat correction, then intermediate wave (B) must be a minimum 0.9 length of intermediate wave (A) at 28.61. The normal range for intermediate wave (B) would be 1 to 1.38 the length of intermediate wave (A) at 26.06 to 16.33.

If primary wave 4 is to be an expanded flat correction, then intermediate wave (B) should be 1.05 the length of intermediate wave (A) or longer, at 24.78.

If primary wave 4 is to be a triangle, then intermediate wave (B) has no minimum nor maximum. It must only subdivide as a three wave structure. It may make a new low below the start of intermediate wave (A) at 26.06 as in a running triangle.

Primary wave 4 may not move into primary wave 1 price territory above 74.96.

Intermediate wave (B) may be any of more than 23 possible corrective structures. It would most likely be a single or multiple zigzag in order to be a deep correction. It may also be an expanded flat to be deep. It may find support at the lower edge of the maroon channel.

Minor wave A would most likely subdivide as a five but may also be a three. If it is a three, then minute wave b may still make a new high above the start of minute wave a as in an expanded flat correction. There is still no upper invalidation point for this wave count this week for this reason.

It looks like a small triangle is unfolding sideways. This may be a triangle for a B wave within a small correction, labelled minuette wave (b). It may also be a larger triangle for a B wave one degree higher; minute wave b may be unfolding as a triangle. It may not be a triangle as a second wave in its entirety for minute wave ii.

ALTERNATE DAILY ELLIOTT WAVE COUNT

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Primary wave 4 may be unfolding as a zigzag, or a zigzag upwards may be almost complete for intermediate wave (A) (as per alternate labelling on this chart).

It is possible that only minor wave A is a five wave structure complete upwards and minor wave B down is unfolding. If minor wave B is a flat correction or running triangle, then within it minute wave b may make a new high. There is no upper invalidation point for this wave count this week for this reason.

TECHNICAL ANALYSIS

MONTHLY CHART

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The month of June is now complete and shows a small increase in volume for a downwards month. The small red body on the monthly candlestick looks to be small enough to be considered a doji. This month represents a balance between bulls and bears with the bears slightly more in charge.

The upper trend line on On Balance Volume was respected. OBV moved down and away from this line. The lower line may offer some support, but it has been breached before, so the strength of that line is reduced.

DAILY CHART

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It looks like price is moving sideways with declining volume. This is typical behaviour for a correction. Price is range bound between about 46.50 to 50.20. During this range bound movement, it is the downwards day of 24th of June with strongest volume, suggesting a downwards breakout is more likely than upwards. This supports the Elloitt wave count.

ADX is declining indicating the market is not trending. The +DX and -DX lines are fluctuating about each other. At this time, they should be ignored until the ADX line again turns upwards.

ATR is beginning to decline also. It seems clear the market is range bound.

On Balance Volume is constrained within the upper yellow resistance line and the lower purple support line. A breakout by OBV may precede a breakout by price, so OBV should be watched very closely over the next few days.

RSI is neutral. There is plenty of room for price to rise or fall.

Stochastics is also neutral. Stochastics shows divergence with price at the last two swing lows: price made a lower low but Stochastics made a higher low. This is regular bullish divergence. It was immediately followed by regular bearish divergence as price made a lower high and Stochastics made a higher high. Overall, this indicates that a downwards swing from price to a new low may be more likely here.

This analysis is published @ 09:26 p.m. EST.