|SP500 2-Hour Chart with 114 Candles|
Of interest, prices have traded below the mid-channel line, which is a likely sign that wave minuet (iv) has begun. And in the bottom indicator panel, the Elliott Wave Oscillator continued to decline. Since the peak of the EWO was about 30 - 31, we would expect the final value of the EWO to be between +10% to -40% of peak. And that means anywhere between about +3, and -12 in terms of the raw indicator value.
In the upper indicator RSI(14) panel, we see that the RSI made a lower low which is "confirmation of a lower low" only. Today's low was lower than yesterday's. It really doesn't tell a lot yet.
In the very choppy decline, downward so far, it is "likely" only three-waves down or a part of three waves down have been made, so far, as it is very difficult to count the downward wave using The Eight Fold Path Methodology. If it turns out to be three-waves down that ended today, then it could be the sub-minuet 'a' wave of a flat. And the 'b' wave of a flat must go back to within 90% of the high of wave ((iii)). And, this 'b' wave could go as high as 138.2% times the height of the 'a' wave; yes, over the prior high, before it's 'c' wave came tumbling down to attack the lower channel line.
It turns out that a 38.2% retrace on wave minuet (iii) would take prices back down to the 2350 level. And, we are nowhere near there yet. The 'c' wave of a flat could easily do that.
The second potential path is that the choppy downward waves are really a "five", or just part of a "five" and this would allow three weak waves upward, before another "five" down to complete a larger zigzag which would only be the first 'a' wave down of triangle. This second path is slightly less favored, and may be needed to waste time until the Federal Reserve's interest rate announcement this month. We'll see,
Fourth waves are tricky. They are like teenagers at the age connoted by the title. It is why I have coined the term "The Fourth Wave Conundrum" for these waves. It is because there are so many styles of flats, triangles or combination waves that can happen in this position before the final top that it makes it inherently difficult to predict the exact top. You thought it was you? No, the difficulty is inherent in wave theory itself.
If you are interested to see a 'b' wave that goes exactly to 138.2% before reversing, it just so happens I counted this one out in the live chat room today. It's on the March, 2017 US Dollar Index Futures (4 Hour) chart. And, the picture of it is below.
|US Dollar Index Mar '17 Futures (4 Hr) - b wave at 138.2%|
After the peak of the wave on Feb 15th, there is an 'a' wave down, and then there is a clear three wave sequence upward (it actually counts as seven waves which is still not impulsive). It hits the 138.2% mark like there was a target on it, and after the reversal, there are now downward overlaps of both wave peaks - which pretty much seals the deal.
There are some who say regular Elliott Wave analysis is not good enough. They say it is not predictive enough. Well, for me it is good enough that I showed the Fibonacci ruler before the top was ever made! Further, I made up this special template for a Fibonacci ruler, specifically, for B waves of flats. Therefore, the only points that show are the ones governed by the rules of regular Elliott wave. The B wave of a flat must travel within 90% of the start of the a:3 wave. So, that is the 90% mark. For an expanded flat, the B wave must travel over 105% of the a:3 wave. So, that is the 105% mark. And, then, in a regular or expanded flat, the common limit of travel of B waves is 138.2%, and so that is the 138.2% mark.
So, this chart makes a specific prediction, and that prediction is that the a:3 wave will be exceeded lower by the c wave of the flat. What other methodology do you know that .. when used properly .. makes specific predictions that you can test to see if they come true?
The question is, "Is that methodology not good enough for you?!" I know what it's reputation is. And I know why. But I do hope you'll at least keep an open mind.
P.S. I know people read blogs and get confused easily. There is nothing about what I am saying about the dollar chart that says that the b wave of the flat in the S&P 500 must "go over the top, or go to 138.2%". Clearly, if a flat is made it must at least go to 90%; that's all. It could go to 138.2%. And nothing says an up couldn't stall at the 78.6% level or thereabouts, and create the b wave of a triangle instead. Both are still equally likely. That's what makes fourth waves so insidious.
Cheers and I hope your weekend starts off in the best of ways.