|Figure 1. With 134 Candles on Daily Chart - Time to Look for a Fourth Wave|
Here is how we posted the hourly chart in the live chat room today. Please ignore the degree labels, they are place markers only in this case.
|Figure 2. S&P500 Cash Hourly - No New High Today - Possible Barrier Triangle|
The diagonal fifth wave ends at 3, then there is a swift A wave down to the low on 17 Aug. This wave is ambiguous and can be counted two ways: as a 'three' or as a 'five'. But there is a triangle and large hump in the very center of the wave, so it 'looks' better as a 'three'.
Then, yesterday in live chat, we counted out the sideways triangle that is clearly marked within the B wave, up. And we said if it was a 'b' wave, then it could result in a 'c' wave up for today which it apparently has. Immediately prices faded, and we counted a five-wave down sequence, as shown below.
|Figure 3. SP500 5-minute Chart - Five waves Down|
We again based the location of iii of 3 even in this five-minute chart, on the location of the low point in the Elliott Wave Oscillator. So now, most likely, we have the 'a' wave down of the C wave of the barrier triangle.
Note in Figure 2 that since cash did not close with a new high, and now there are five waves down, there is no evidence, yet, to support that an ending contracting diagonal is in progress for this wave. But, we see many signs of a barrier triangle. In a barrier triangle, wave 3 must, itself, be part of the barrier, and no hourly wave should close above the barrier - although small excursions are allowed.
Further supporting the case for a barrier triangle would be the fact that the B wave is longer in time then the A wave, which is most often the case in contracting triangles.
We are thinking this barrier triangle might be a 'pre-Yellen' triangle - prior to her speech at Jackson Hole. And, if her speech is met with a yawn, then perhaps the fifth wave out the triangle would be on the first of the new month, when the inflows from pension funds, mutual funds, and 401k's again becomes available.
The potential barrier triangle, must still form properly in every detail - like all triangles. For the barrier triangle to form properly, its wave 'e' must close back down over wave 3. And, like all triangles, the best alternate for it is a 1-2-i-ii (upward in this case but there is insufficient evidence for that, as well, at this point).
This is all we're comfortable with at this time. Again, a triangle must play out properly if it is to be correct. We don't see the evidence for a diagonal - or we wouldn't hesitate to show it. Like all fourth waves, it is subject to "The Fourth Wave Conundrum" as we have cited in our video, A Critique of Elliott Wave for Trading.
Best wishes in this hard to navigate chop.