Tuesday, September 6, 2016

One Way Out

So, there is one way that the hourly triangle could have wrapped up today, but there are things we don't like about it. That chart is below.

One way the triangle could have wrapped up
While the count above is a legal count in EW terms, it seems strained in terms of the duration of waves circle-d and circle-e; they seem too short in time. Also, the (c) wave of circle-d would be a slight truncation. While these things can happen in triangles they are not the first expectation.

For this reason, we must also suggest it is possible for the (c) wave of circle-d to still be in progress and possibly form an ending diagonal like this one, below.

SP500 Hourly Triangle Continuing
So, the bottom line is we won't know for sure until or unless additional fractals are broken either higher or lower. But, in the first case, the potential wave circle-e did come back down to overlap wave 3, as required, in a running triangle.

In the second case, the circle-d wave is not over, and, when it is, then circle-e must come back down to overlaps wave 3, again. But, in this second scenario, was circle-d may not under any circumstances travel higher than wave circle-b, or below circle-c; those are our two key invalidation points.

Let's see how it goes. We find it encouraging that the market has not broken to the down side and completely invalidated a triangle at this point. Triangles 'take time and move sideways' and this one is certainly doing that.


  1. The problem is the ED on the 5 min chart does not count properly unless just wave 1 completed at Tues high. This would give the entire 'c wave' an odd look IMO.

  2. Can circle (e) go below circle (c)?