Tuesday, September 22, 2015

Objective Invalidation

Now on Plan B


In yesterday's post, we raised the invalidation point for the potential contracting leading diagonal to 1953.45 because there were an initial five waves up, and they should not have been exceeded lower if the diagonal were to form properly. Later in the day, the five waves extended higher but into a three wave sequence with c = 0.618 x a, where 'a' was the initial five waves up.

The raised invalidation level 1953.45 was taken out on the cash open this morning, so that level - and the only needed level - of invalidation occurred. There are several purposes now to this post.

The first purpose is to clearly indicate that the second level of invalidation has also occurred. Since price is now below 1930.45, then a minute wave iv would now be longer than a minute wave ii. So, the upward contracting diagonal is as dead as it could be.

The next purpose of this post is to also 'rule out' an Expanding diagonal for an up wave A of a Primary 4 triangle. The reason for that is that minute iii is 'shorter' in price than minute i. In an expanding diagonal minute iii would have to be longer than minute i, and it is not.

In the weekend video, we contended that we would 'err' on the side of Primary 4 for a while, but the discussion in the video states that a Primary fourth wave is on 'shaky ground' because of the shallow Primary second wave. We also wrote in our posts that this daily count was a potential leading diagonal, and it would have to form properly. It did not. We have always carried the alternate of W-X-Y on this upward move, and therefore, there is no surprise or dismay at the invalidation. It 'simply' but entirely changes the picture from Plan A to Plan B. We gave the bulls a chance; they fumbled the ball.

So, a lower low than 24 August is now expected. Next, we must confirm a five-wave sequence lower, to the lower low. Those are not fully in evidence, yet, and a chart showing the invalidation of the prior diagonal is below. Please refer to the 20 Sep post for the Plan B details. However, if those five daily minor waves down occur in proper form, then we must also take a Primary 4th wave off of the table. This would agree especially well with what is occurring in the FTSE 100, as well, having overlapped it's first wave up after March, 2009.

Again, we will only apply wave labels in accordance with sound Elliott Wave principles, as best we understand them, and attempt to show you this logic until it is clear.

Upward Diagonals of any type invalidated

1 comment:

  1. Elliott Wave analysis properly applied!! Nice work as always Joe!!