Problem Child

Every family has one (or two ..).  Let's see if we can deal with ours. From a degree standpoint the chart below shows the problem wave on the ES weekly timeframe. As you can clearly see, the recent July/August down wave is longer in price than the down wave that ended the week of 23 Oct 2023 as shown by the Fibonacci ruler. This was the wave of the 2024 Japanese Yen debacle.

The reason it is a problem is that impulse waves expand by 'smaller degree sub-waves'. This one is too large to be 'smaller' and it overlaps the prior wave high made the week of 1 Apr 2024. So, what do we do with this messy wave count now? Well, a long-considered degree analysis shows that this degree labeling does, in fact, work.

There is, in fact, a table included in the chart of the key smaller degree relationships found. It could stand some scrutiny from the readers of this blog. But one would read the above chart like this. Starting in the lower left from Intermediate wave (2).

1. There is an expanding leading diagonal Minor A wave in the form of 3-3-3-3-3, which is allowed under the rules.
2. That the expanding diagonal truly was 'leading' is borne out by the fact that there is a higher wave, at ⓑ, which terminated over the end of the diagonal.
3. After Minor wave A, there is an ⓐ wave down - which is much longer in price than the prior (b) wave down. Therefore, it is likely of a higher degree than the (b) wave and it is shown as such. Minute ⓐ is larger than minuet (b), and so it stands.
4. Next, that minute ⓑ wave, up, while very large to the eye, is still smaller than the Minor A wave up. So, there just isn't a degree violation. Oh, it isn't pretty, but then the ⓒ wave down is a failure wave, just as predicted by a ⓑ wave that is more than 1.618 times its ⓐ wave. This would make the Minor B wave, down.
5. Now, we appear to be working on an impulse C wave, up as given previously on the four- hour chart. And thus, this might provide the alternation being looked for in a corrective structure: diagonal A, flat B, impulse C.

I would also mention, the other alternation would be Long A, short C within the whole wave up. If it comes to pass, it would be one of the more bizarre counts I have ever encountered, but that's why I do this. I am here to learn, too.

Have an excellent rest of the long weekend and holiday if you are celebrating it. Remember, many cash markets are closed on Monday.

TraderJoe