Wednesday, June 7, 2017

Continuation - 3

The major change to the Dow chart below is the time frame, from the previous 10-minute bars to bars which are each 15 minutes. This was to allow 120 - 160 candles on the chart, per The Eight Fold Path Method. The overall count is not changed. Wave 4 occurred at 140 candles.

Price did indeed gap up today, at the open, surpassed the 21,185 level noted yesterday, then did a turn around to make new lows, extending the fourth wave, as we had noted clearly via the alternate count in blue, yesterday. This was the scenario where yesterday's up wave was only an ((x)) wave. The next ((z)) wave, lower, occurred in a clear three-wave sequence, with an ending (b) wave triangle stuck in the middle.

It is interesting that - at no time - did the DJIA close below the 31.8% retracement level. Notice, too, how the count of the extended fifth wave of 3 resulted in the retrace attaining the level of between the prior wave ((iv)), and the wave (ii) of the extension. That is, in part, some of the benefit of true Elliott Wave work. While some web-sites were projecting a "third-of-a-third", we said we'd prefer not to buy at the highest levels in history and to wait for a pull back. Well, such a pull back did indeed occur.

DJIA 15-minute Wave 4 Added a Wave But DJIA Did Not Close below 31.8% Retrace Level

So, the downward count to wave 4, is ((w))-((x))-((y))-((x))-((z)), either a triple zigzag or triple combination, but in any case triples are always terminal in Elliott Wave work. It should be noted that wave ((z)) ended on a nice divergence with the Elliott Wave Oscillator (EWO) when compared to the prior wave ((y)).

This same divergence, but using RSI(5), was also pointed out in the real time chat room on the hourly Dow futures, a copy of the chart posted, is also shown below.

DJIA (YM) Hourly Futures with Divergence on RSI(5) at the Low

Towards the end of the day (refer to the first chart, above), the Dow broke the ((x)) wave high, and is now likely in sub-wave ((i)) & ((ii)) of wave 5, up. That would be simplest. But, since a fifth wave is likely and wave 1 was not a diagonal, then wave 5 could be, but does not have to be. Therefore the ((A)), ((B)) in red on the first chart is for the case where the fifth wave becomes a diagonal.

One should note higher highs are possible (particularly with the ECB meeting tomorrow morning), and that would be very clean. So we hope that happens, but not from a monetary standpoint, only from a clean wave-counting point of view. If things get muddy, it might be because of the Comey testimony which will follow, and for that reason - and just the reason that we are likely in a (b) wave up - we are also prepared for a truncation.

Since we have cleared the ((x)) wave, and wave ((i)) of 5 at this level equals wave 1, up, this, in fact, could be the truncated wave. We think that is quite a bit less likely. But, it is possible. The next level to look for would be anywhere over the high, and up to 21,288 - which is 0.618 x net (1 though 3).

Stay patient and flexible. Things are proceeding well, so far.
Have a good evening.


  1. If there is going to be a fast and swift c wave of minute 4, I actually think a truncation is more likely.

    1. No truncation in the Dow. S&P has not made a higher high, yet, though.

  2. Thorough analysis. Much appreciated.