Monday, June 5, 2017

Continuation

This is a continuation of the same 10-Minute chart of the Dow Jones Industrial Average we showed you on Friday (second chart down), using the Eight-Fold Path Method to count an impulse wave.

DJIA 10-Minute Chart Continuation of The Eight Fold Path Method

The market opened lower today, almost hit the 23.6% retrace level, then rebounded higher and stopped just short of the wave 3 high - twice! Therefore, we appear to have the the three waves down to an a:3 wave (of a flat or triangle), followed by a very nice looking three-waves up to the b:3 wave of the very same flat or triangle. Towards the close, price broke below the .b, down, wave of the b:3 wave.

Some key points to note are: 1) if this is wave 4, it is now longer in time than wave 2, and is growing more complex by the day. That would be very good alternation, and the time relationship would be typical of many Elliott Wave impulse waves. 2) The downward price retracement still has not hit either the 23.6% or 38.2% retrace level. It could do that, but, while likely, is not a requirement if a triangle forms from here. 3) Notice that price in wave 4 has finally attacked the lower channel line as per the method, and today, price is weaving around the blue EMA-34, very much in fourth wave fashion. This indicates good form & balance to this point, because every black numbered wave is on an opposite side of the EMA-34. 4) The Elliott Wave Oscillator is still within it's wave four limits of +10% to -40% of the peak reading in wave 3.

This chart simply suggests that after wave 4 wraps up, there should be one more higher wave set - provided it does not truncate. Let's hope we don't get a truncation so we have a clean spot to count from.

On this chart, invalidation would be any downward wave that overlaps wave 1. But, note that blue .ii is at the 38.2% retrace level, and black iv is at the 50% retrace level of wave 3. In practice, the latter should be used as a wave counting maximum for downward travel, without a new high, first. And, recall it certainly appears like the fifth wave of wave 3 is the extended wave in that sequence. That most likely means a triangle should not form here, because the retrace levels of the extension would likely come into play.

When we showed you the longer term chart on Saturday, we are trying to do nothing different than to apply these same rules and guidelines where applicable to the daily chart.

Hope this helps. Have a good evening.
TraderJoe

2 comments:

  1. Thanks Joe. I'll offer an alternate from the 2353 low in SPX: a-b-c(2376-2365-2388) (c=a)
    x(2379)
    a-b-c(2417-2403-2440) (c=a)
    x(2434)
    a-b-c-d-e (a non-limiting triangle that ended late today at 2438.63.)

    If this count is correct, then the entire move from either the March low, or the April low,(depending where you start it) finished today. If you start it at the April low on 4/13, then 2440 was a 1.618 extension of 2329-2398.

    Supporting this count is the fact that the 47 TD cycle, which has been 'almost' like clockwork since the high on 7/20/15, and has been alternating between swing highs and swing lows from its inception, came in on Friday.

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  2. Put/call ratio is very low at the close today.

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