Friday, January 13, 2017

Five Waves Up

Here is that Dow 30-minute chart on which we counted A & B, in which B was likely a very messy flat. We were expecting five waves up in a C wave, and sketched it in on the chart. Here is an updated version.

 DJIA - 30 Minutes - One set of "five-up"

First, starting over on the left-hand-side, depending on whether you think the downward wave following the A wave up is a smaller 'a', or 'w' wave (...it is clearly a three-wave sequence...), then the 'b' or 'x' wave, upward to Jan 6 measures precisely 138.2% of the length of that 'a', or 'w', wave. How is that for wave theory accuracy?

And then, the Jan 12th wave downward to B just marginally breaks that 'a' or 'w' wave lower to confirm the flat yesterday morning.

Then, on the opening this morning, that "tsk-tsk" gap I mentioned yesterday (now shown with the black circle) filled straight-away. And, once again, no gaps to the upside (on this chart).

Next, it's hard to argue that we've had five clear waves up (.i through .v), and this is followed by what looks like a bull flag downward, which broke upward at the end of the day, following by a back-test of the bull-flag channel which has held so far.

The downward wave on the Dow measures between 50 - 62%, and is deep enough for a second wave. While we don't know that the second wave downward is finished completely (... it could well be...), wave theory tells us that after 'five waves up' there should at least be five more waves up, and possibly more if the C wave develops as it should into an impulse or diagonal.

Cheers and enjoy the long weekend!

1. Thanks Joe. Do you know any course books or websites for further learning of Elliot wave theory? (Apart from this one of course which is the best out there).

1. Hi Vive. Free references can be found at my main web-site; http://studyofcycles.com/Tutorials.html
Sorry that the Jodi Samuels video series - which was quite good - is no longer freely or publicly available. It used to be in the public domain, but is no longer.

2. Wow that book is £29.99 in the U.K yet \$12 in the states. They sure know how to make their money.

2. Hi Joe, hope you enjoyed the break. I have a quick question about the EWO. Can you confirm what this is made up of? I have been doing some reading from Elliot wave international(free stuff) and I haven't seen any reference to it.

1. The mid-point or median of each of the past 34 price bars is first determined. Then, the EWO is the 5-period simple moving average of the median of the price bars subtracted from the 34-period simple moving average of the same median of the price bars (i.e. FastMA - SlowMA), and plotted as a histogram with green colors when it is rising and red colors when it is falling.

It is not the same as a 5, 34 MACD histogram for two reasons. The latter uses closing prices instead of the median of prices, and the MACD is calculated with exponential moving averages rather than simple moving averages. So, they are really two quite different things.

You won't see any reference to the EWO on Elliott Wave International as it was developed and fine-tuned by Master Trader Bill Williams, as per the Bill Williams video on my web-site studyofcycles.com/Tutorials/.

3. Thanks again Joe. Seems like a very good tool to use along side the waves.