Friday, March 30, 2018

Longer In Time ?

Still within an overall potential Minor 4 triangle count fourth wave, how might we best count the internals of this latest wave down? One clue might be that the (a) wave down took approximately nine (9) days, and the (c) wave down only took eight (8) days - thus far.

Is it possible that the (c) wave down wants to take as much time or slightly more time than the (a) wave down? It certainly is. It is a triangle, after-all. And the very purpose of a triangle is to take up time and to move price sideways.

A chart of the 4-hour S&P500 cash index is below. The downward count on the (c) wave is what the count best "looks like" at this point in time.

S&P500 4-Hr Chart - Potential Triangle Count

If price doesn't make an immediate new high over the high of Tuesday this week, it may be in a smaller triangle. So, things could get scary again, but it is still possible for the larger daily triangle to form if only a marginal new low below wave iii is made.

Such a wave would be a trap low, and serve the purpose of getting more participants more bearish before the triangle reasserts itself to the upside, in the form of the (d) wave.

In no event, however, would it be expected for the (a) wave to be exceeded lower in this type of triangle count.

Again, this can all be a part of trying to 'hammer out' the lower trend line of the triangle. It's never comfortable, and the counts can be difficult to determine. IF the above scenario comes to pass, it would demote the (c) wave back to a simple leg of the larger daily potential triangle. This might allow either the (d) or the (e) wave of the triangle to become the complex leg.

But, if it does come to pass, it might satisfy a triangle time relationship that the (a) is less often the shortest wave time-wise in a contracting triangle.

And, if this scenario does not come to pass because Tuesday's high has been exceeded, it would indicate the triangle's (d) wave is likely beginning.

If you are in the U.S., or elsewhere where this is a holiday weekend, have a very happy one.
TraderJoe

13 comments:

  1. Hi Joe,

    Thank you very for sharing. Very clear! I enjoyed.

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  2. How can the abc from 2802-2695 be labeled a wave i? Thanks.

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    1. ii is larger than b. Wouldn't that be a degree violation?

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  3. Salut joe
    La phase 4 se fait en A B C ou en 1 2 3 4 5 ?

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  4. Joe, Thanks a lot for the detailed analysis. Can D and E extend significantly in time compared to what you have forecasted. In the past, I have noticed that the last legs of the triangle take a lot of time with decreasing volume. TIA.

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  5. I'm glad you caught that triangle. My trading software automatically labeled it in on Wednesday. I think it would be a weird looking bottom with this triangle, even if we break higher.

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  6. Joe, in case you missed my question I'll ask it again.

    Both ii and iv of c are greater than b. Aren't those degree violations? Thanks.

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    1. ...still thinking about it. The ii would be smaller than c of a,b,c which would be smaller than (c) of (a), (b), (c), (d), (e), which would be smaller than all of Minor 4.

      So, if c of (c) is to be larger than a - which is allowed - then how does it do that unless it has some larger waves in it. In other words, say for example, if c = 1.618 x a, how can it do that unless it has some larger waves in it?

      What I'm saying is I'm still thinking this one over. If the triangle for wave iv does not form, then the double or triple zigzag might still work.

      I understand that wave ii, would be a sub-wave of c, but it is not a sub-wave of b. If it were a sub-wave of b, I would definitely say it was a degree violation. But, what if ii is made up of all sub-waves that are smaller than b?

      Again, I am saying I am still better trying to understand the topic of degrees as it relates to structures like zigzags (particularly DZZ, as in what is the degree of the 'x' wave?).

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    2. I think in a DZZ, abcxabc, the x wave is the same degree as the other 6 waves. In regards to extended C waves (or 3rd waves,) just look at what happened in the rally from 11/16 to 1/18. That wave was 2.618 of the 1st rally wave from 2/16, yet none of the corrections within that wave were larger than the correction of larger degree that preceded that wave. I like the idea of staying rigid to the degree rule, and if a count violates that rule, then I look for the count that doesn't violate the rule. That's why I'm counting the decline from 3/13-3/23 as a 3:3:5, or possibly a 3:3:3. Since there is no proof yet that it's done subdividing downward, then I'm staying flexible as to how those waves will be grouped.

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