Monday, October 21, 2019

Three Waves down and Three Up

U.S. Debt Clock: $22.91 Trillion; prev $22.84
ES Daily Candle: Higher High, Higher Low, Higher Close: Yin-Yang Candle
Market Posture: Neutral and Probing
Daily Swing Line: Neutral (Higher High, Lower Low)
Daily Bias: Up (Settle Above 18-day SMA)

The minute ((a)) wave is shown at the upper-left side  of the chart. After only three-waves down from that wave, which were called properly in real time, we said virtually any type of "three-wave" structure could form for a minute ((b)) wave, down, and possibly take us to the 18-day SMA.  That could be a zigzag or series of zigzags, a triangle or a flat.

ES Futures - Hourly - Near Equal High

Today, prices rallied to a "near equal high" with the prior wave, and certainly rallied slightly beyond that 90% retrace level shown by the Fibonacci ruler and the blue arrow. Thus, prices could have created the structure of a three-wave a:3 wave down, and a three-wave b:3 up, which could mean that the minute ((b)) wave will form as a flat wave. And, if that is the case, then the most common expectation is to form a c:5 wave downward.

One of the reasons I favor the flat interpretation at this time is that the upward wave is almost equal in time to the downward wave. So, typically, by the principle of alternation, the next wave in the set will break that pattern.

For the present, it would not be good to assume too much until prices are again below the ((B)) wave shown from Friday. The reason is, there are still ways the market could exceed the high, IF the b:3 wave of an expanded flat is to be constructed, instead.

So, we may well be in the b wave of a ((b)) wave of a (B) wave. Do you wonder why the Elliott count might be sloppy and uncertain at times? Thus, patience, flexibility and calm are especially needed at this time.

Have a good start to the evening.
TraderJoe

18 comments:

  1. How common, if it occurs, does one see a C wave truncation in an expanded, or regular flat?

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  2. I am curious as I expect any downward wave to find strong support at former S/R around 2900 but that would require a C wave truncation....

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  3. If I my ask ET, why did you change from the terminal triangle to the continuation triangle count?
    Thanks!

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    1. I would imagine he has concluded that the larger trend remains upwards, as implied by the incomplete minute a,b,c designation for the current price action...

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    2. ..that, and sentiment was against it. It was too negative - based on measures I use - at the time.

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  4. If we are talking about the same degree, the referenced C wave would be expected to go below the a wave low registered on Friday.

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    1. Yes, barring a C wave truncation. I am not sure if that is permitted in flats...

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    2. yes, a C wave truncation is allowed in a flat. But, they usually do not happen as readily when the 'time' of the b wave of the flat is similar to the 'time' taken by the 'a' wave of the flat.

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    3. EWP Apendix figure A-3 shows an interesting tripple combination correction, with the last tripple as the terminal triangle. What's interesting is that "they" have labeled all the legs in the tripples with the same degree, and that they don't seem to bother that A and B of the triangle is bigger than X, just like current situation.

      https://invst.ly/m9vgp

      The A wave of current possible triangle is pretty big and fast as should, and after that breadth collapsed.
      C is likely the complex leg WXY? So maybe it is a terminal barrier triangle?

      As apendix mentions, this sort of complex correction in bigger degrees has almost never happend, so who knows what's possible or not..

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    4. @Erik B. You are completely mis-using figure A-3. That is not a 'terminal' triangle. It is a continuation triangle. A terminal triangle breaks 'down' in an up market. The one shown breaks "up" in an up market. A 'barrier' triangle is a continuation triangle. The term 'terminal' triangle comes from Neely, wherein prices can break 'down' out of an upward B wave that ends with a terminal triangle (for example).

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  5. ES now leaving the hourly up channel following an hourly divergent higher high versus the MACD. Chart below.

    https://invst.ly/mbhhs

    TJ

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  6. Yep! Anyone else think these protracted corrections due to relentless Q.E...?
    They threw billions at the 3000 SPX shelf...!

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    1. Was a great zerohedge article stating fed had to expand BS cause Japan taper.

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  7. Like clock-work...huge cash dump at 2999.88...

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  8. Leading expanding diagonal down, now in a fourth...?

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  9. Longer wedge. https://imgur.com/BcPu61B

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  10. A new post has been started for the next day.

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