So, during live chat, I re-studied the potential triangle pattern and settled on an hourly chart which appears below. What was initially bothering me was the fact that a contracting triangle should have only one complex leg, and I kept coming up with two complex legs - until I found another pattern.
|SP500 Hourly - Triangle Re-Established|
So, circle-a is simple, circle-b is complex, circle-c is simple, and waves circle-d and circle-e should be simple zigzags if a triangle is to play out in valid form. And, again, circle-e must come back down to overlap wave 3 to the left.
Ah, you say, "that downward overlap could have already happened, right?"
Well, it could have, but I don't think so. Here is a very short term chart of the SP500 5-minute chart counting the circle-d, wave up.
|SP500 5-minute Chart|
This count had actually carried over from yesterday. We had counted waves 1, 2, 3, 4 and part of 5, up, which seemed incomplete. As far as can be told right now, we finished wave A, up, of circle-d this morning. Then, we got an A, B, C down both to the 38.2% retrace level, and where C is nearly exactly, 1.618 x A. We think this is the B wave, down, of circle-d up. We even called the internal wave iv of C as a triangle, and the wave v, down, on the mid-line of the channel.
If prices land on or slightly above the high on the close, it may wrap up the C wave, up, of circle-d, up, and in fact, wrap up the circle-d wave.
Circle-b and circle-c now provide the clear invalidation points for wave circle-d if this is indeed a running triangle. And it is hoped this example shows the value of an Elliott Wave count. We clearly noted where the diagonal option would invalidate. And when it did, we quickly and swiftly reacted. If your Elliott analyst is not giving you clear invalidation points, you are only getting half the story!
We apologize for originally missing that internal triangle of circle-c. As far as I know, no one else has pointed it out prior. But we wanted to get back on track, and keep you up to date.
We hope this helps clarify things as the long weekend in the U.S. approaches.