Thursday, October 29, 2015

Minimum P5 Met

This four-hourly chart of the DOW below shows 'five waves up' from the August lows, the fourth wave of which we clearly counted as a 'flat' wave. With wave 2 as a 'sharp' of approximately the same degree, the alternation pattern is acceptable.

With price now exceeding the August 10th minute wave iv (circle-iv), and the price retrace now exceeding the 78.6% level, this chart would outline the 'minimum requirement' for a Primary 5th wave according to typical truncation guidelines shown in Mastering Elliott Wave by Glenn Neely. We will further note that the NQ futures are also exceptionally near their Jul 2015 all-time highs.

We have placed a big question mark (?) on P5, because there is absolutely no price confirmation that the upward wave is over. We are 'only' saying that as a P5 wave, it has met the 'minimum' upward expectation for a truncated P5 wave. Could more upward price movement occur? Sure. But, if it doesn't, a truncation would be one of the two reasons why. More text below chart.
Dow Jones Industrials Four Hourly Chart - Truncation Count
What is the second reason why significantly more upside price movement 'might' not occur? That is because it is 'just' possible to also count the whole sequence upward as a large A-B-C. If I need to show that count later, I will. That means the upward wave 'could' be part of a large Intermediate (2) wave for a downward diagonal. The issue with that scenario at the present time is that there is no downward price evidence for it - none.

Further, more upward price movement could occur! You will note that with the P5 wave even though wave 3 is shorter than wave 1, wave 5 is not yet as long as wave 3. So wave 5 could extend some. Downward price movement today, so far, is minimal, so this certainly could occur. Since further upward price movement is not ruled out, we are more favorably disposed to say that a P5 wave has indeed occurred - even at this level. And, further, it is possible that wave 3 is not properly located yet. It may be the wave that crosses the top, meaning that the wave is still sub-dividing upward. But all of that is in the future, and we must have patience until there is more clarity, with larger downward waves and clear overlaps to help confirm the wave structure.

Cheers and enjoy the chart.


  1. Awesome timing Joe! Thanks for the post!

  2. Well I am glad you have even come to the P5 camp. You were saying that this was an A, B, C not too long ago. Then you conceded small chance of P4 and now you have quietly gone full P5.