Tuesday, September 20, 2016

It's Still Potential Until It Isn't

Here's the count of the hourly SP 500 potential triangle (a), (b), (c), (d), (e), that now gathers more and more evidence.

Hourly Triangle in S&P500 Index


The continued evidence is 1) there are lower highs and no higher highs, 2) the structure is very overlapping, 3) the Elliott Wave Oscillator or EWO remains less than -40% of the value of wave circle-iii on the other side of the zero line indicating a fourth wave, 4) the EWO is red and declining, and 5) volume is declining as fits a triangle.

If wave (d) of the triangle forms properly, then wave (e) can be almost any length as long as it does not travel above wave (c), and provided it overlaps wave circle-iii, down, in the upward direction. The triangle could form with a flat bottom, or as a symmetrical triangle in the final analysis. Either are acceptable.

If, and only if, the potential triangle forms properly, then a fifth wave down would be likely to form. In the case of a true barrier triangle being formed, then the breakdown can be short and swift. If a contracting symmetrical triangle forms, then a more extended wave v can occur.

Why would wave circle-v of C form in the downward direction? What would be it's purpose? Well, on the three-day chart, below, we know the DOW has overlapped it's wave A of (1) in the upward direction, but the S&P has not.

Ending Contracting Diagonal in the S&P 500 (3-day Chart)


Perhaps the purpose of a further downward wave is to cause the S&P to overlap, as well, and cause the S&P to contact it's lower trend line. Time will tell!

2 comments:

  1. Joe,

    Thanks for stating: "In the case of a true barrier triangle being formed, then the breakdown can be short and swift. If a contracting symmetrical triangle forms, then a more extended wave v can occur." A lot of other EWers don't even mention this or consider the implications.

    Much appreciated!

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  2. Joe I am not a fan of Elliot Waves but the way you explain it is seriously winning me over and showing it's true value. Many thanks.

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