Thursday, September 8, 2016

Validated Triangle with Better Form and Proportion

Here is another post done for you in near real-time. This post was shown in the live chat room.

This morning, after we have counted out this hourly triangle for you wave-by-wave, since 23 August, the wave circle-e, crossed back down over wave 3, and formed a complete hourly triangle with much better form and proportion than we had said was 'possible' in our post of 6 September. Here is a view of what the triangle currently looks like at the hourly chart level.

Running Triangle Validated by wave circle-e crossing back down over wave 3
Now we must be clear. The waves in this triangle are 78.6% waves. Therefore, if the circle-e wave wants, it can also move lower and travel far enough down to fully retrace 78.6% of wave circle-d. But, even if it doesn't, wave circle-e has done all it needs to do to validate the triangle.

Since triangles usually appear before the last upward wave in the sequence, at some point, there should be at least one good five-wave sequence upward to make a higher high. And, again, this is a running triangle, which means that it is essentially still a bullish structure, and more upward waves can be expected. In fact, the usual target for a triangle is to add the widest width of the triangle to the breakout point.

I'll cover the possibilities for the daily chart once the triangle has broken to the upside. There is now only a very small probability that it won't. There is still an invalidation point for wave circle-e, and that is below the low of circle-c. So, if the circle-e wave decides to get scary, keep your eye on that point.

As you know in counting this triangle, we originally thought we may have had a contracting ending diagonal at wave (w) of circle-b. But then the high of such a diagonal was broken by just a few points, likely indicating a true diagonal had not formed. Then, mid-way through the triangle, we proposed that a downward diagonal would be possible, but it did not form well either, and we went back to the triangle count.

Why do we re-advertise these small miss-steps? It is because we are trying to emphasize proper wave counting, and show what is involved. We practice the concept that we would rather be wrong on a few twists-and-turns involving a few points, rather than get the big move wrong. But we always strive to get every Elliott Wave count posted as one that meets the rules and guidelines of the theory. When they work out, it's fantastic.

We do not believe that every Elliott Wave count can be known in advance. Only some can. The market - our collective opinions - are more complicated that one person can usually decipher. That's why we made the video, A Critique of Elliott Wave for Trading, and posted it in the YouTube channel. And, we again emphasize, a wave can't be known until it has formed. There has to be something there to see before one can hypothesize on the future direction of the market.

That being said, we did correctly find the key to the triangle count - which, as far as I can tell - no one else saw. And that was the internal triangle (b) of wave circle-c. That internal triangle gives the larger triangle its correct form and structure. You don't need an expensive course to find it. You mostly need a flexible thinking process, and the mental acceptance just to be ok with small miss-counts. No. No one likes to see errors in counting, but one just needs to accept that they will periodically be there, and just to quickly get back on track. It is not a reflection on the analyst that the market does some unpredictable things in the short run: it is the very nature of the market itself.

We hope this helps explain our approach, and our lack of desire for 'guru' status or any such thing. Elliott Wave theory is something that can be studied, learned and applied, with very little in terms of costly investment. But an investment in your time might serve the purpose better!

8 comments:

  1. Hi Joe. Many thanks another excellant post. Might I enquire where you source your data? - your charts are always very clean and clear. Also when counting, do you consider Glenn Neely's approach to wave identification? I read his work some years ago and frankly found it a bit confusing. Your Eight Fold method is worth its weight in gold, especially your use of the Elliott Oscillator for wave identification. Thanks again for sharing your work.

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    1. Hi Rusty. I use a data vendor called Barchart.com; they feed directly from the exchanges. (I have tried other less expensive services, like steaming charts from Freestockcharts.com, or Investing.com, but they each have some serious issues - like delays, unofficial data, or incorrect assignment of extended trading hours to the wrong trading day, etc.)

      But, as to the charts being clean and clear, that is due to a program called MotiveWave, which is a premium (costly) charting package, but it's the best I've found, and I looked at a lot of them. You can come close for free with NinjaTrader. But, Ninja is not as flexible or as easy to work with when markets are moving quickly.

      Finally, as to Neely, yes! I use all of his measurement work that was published in Mastering Elliott Wave. But, no! I do not use 'any' of the Neely extension waves - such as diametrics - that he later used to force his counts and his views. They simply aren't necessary. But, his measurement clarifications of Elliott's original work are excellent. I even used them in counting this triangle. As of today, every wave in the triangle is longer than wave a; today wave e became longer in time than wave a. Waves b, c, and d already were. These kind of measurements are what can provide great patience to the wave counter when needed.

      Hope this helps.

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  2. Hi Joe,
    I would like to count this as a correction to the impulsive wave from 2075. We had a leading diagonal, that was followed by a b wave upwards that finished today. We can expect the c wave to be the downward impulse that targets 2120.

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    1. Count doesn't make any sense .. there was not a higher high (new ATH) for a b wave today. You can 'like' to do all kinds of things, but they might not make sense in terms of defined Elliott wave counting.

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    2. - We are forming a series of ending diagonal or leading diagonal of the 5th wave from Feb of this year.
      - Wave 1 ended on June 8, and Wave 2 on Jun 28 as part of brexit.
      - The "A" wave of wave 3 ended on Aug 12, and we are doing a "B" wave.
      - The "B" wave comprises of a, which was a leading diagonal, b which is a zig zag that ended yesterday, and we are starting c today.

      The pattern is playing beautifully, with the target for c wave around 2120 to 2130

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  3. Got to the .786 quickly. What happens if 2157 is broken?

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