Thursday, December 22, 2016

The Results are Nearly In

So continuing on yesterday's post of the Dollar Index, here is how the count proceeded regarding wave 4. Recall, I was looking for either a FLAT wave or a triangle. From the measured wave lengths below, the wave is the flat structure, and I have x'ed out the triangle possibility.

Dollar Index - Two Hours - Flat

In the real time chat room early this morning, at the point of wave (iv), I was able to call that the down waves to yesterday were likely an ending expanding diagonal wave - and sure enough, wave (v) promptly followed. You see the waves numbered here, as waves (i), (ii), (iii), (iv) and (v), and we name that structure as c:5, meaning a 'c' wave in five-waves lower. The meaning of the ending expanding diagonal is that it will likely end  the downward wave sequence from wave 3.

Prices have not yet broken above wave (iv); if or when they do, the downward movement is likely over. There is a possibility of one more down move to a lower low (if this up wave ending the day is only the .c wave of a larger flat b wave inside wave (v), downward. We should know that early tomorrow.

At this point in time, the c:5 wave has not exceeded the low of the a:3 wave which would be more common in a flat. As I said above, that still could happen. If it does not, it simply means the upward pressure on the Dollar is so great as to leave the fourth wave with this minor truncation, creating a 'truncated flat', or 'running flat' - whichever term you prefer. Regardless, shortly, there should be a fifth wave up. (Targets would be 5 = 1, or secondarily, 5 = 0.618 x net (1 through 3)). Because wave 3 is only slightly longer than wave 1, then there is the possibility that the fifth wave extends to the longer target - fooling most. Time will tell.

The other thing to note on this chart is the fact that we have re-drawn the Elliott Parallel Channel so that it now meets the low of waves 2 and 4. When you do this, you should find a portion of wave 3 that sticks above the channel - as this one does. (If you don't see that, then you are likely working on a multiple zigzag, instead). Wave 3 should be above the channel to show it's momentum.

And, lookie here! Yes, in the S&P500 Index, on the two-hourly chart below, price has finally traded below the EMA-34, a prediction we made days and days ago for you.

SP500 Cash - Two Hourly Chart - Price Trades Below EMA-34

Note too that the EWO with 126 candles on the chart  is now also below the zero line again, in that famous fourth-wave signature.

As well, there is now a rather clear trend line break (which is shown as the dotted gray line).  Can this wave be forming a triangular fourth wave? It sure could. The exceptionally low holiday volume might go along with that. (But there is still nothing yet to say that a double-flat couldn't still be forming in a longer price pattern - although this is certainly not required at this point).

If price is, indeed, making a triangle, remember that triangles usually occur before the last wave in the current sequence, i.e. before a wave 5, up, in this case. And, if wave 5 forms, it should be shorter than wave 3, because wave 3 is shorter than wave 1.

Cheers and enjoy the pre-holiday spirit.


  1. Thanks again, Joe!

    Appreciate the time you spend posting these blogs!

    1. Welcome Mark. And I hope they are proving fruitful.