How Does It Fit?

I thought it would be helpful to post how the recent triangle and the pop out of the triangle best fits on a slightly longer term chart of the cash S&P500 Index, using the fully disclosed methodology of The Eight Fold Path for Counting an Impulse.

Below is the four-hour chart of the S&P500 Cash Index. For the most part I am going to let the chart speak for itself, but there are few points I wish to emphasize.

S&P500 Cash Index - 4 Hr Chart - The Eight Fold Path Method

So now with at least 120 4-hr candles on the chart (remember, you show between 120 - 160 candles for the wave of interest), the first item that becomes apparent is way over on the left hand side of the chart. In order to avoid a degree violation then the prior waves must be inside a triangle. That is as a result of the fact that ((ii)) is larger than wave (e). Therefore, they can not be nested 1-2-i-ii by the very meaning of the term degree. Next, when you chose these locations for (i), and (ii) you can see that wave (iii) has very, very close to a 2.618 relationship to these waves. This is as expected. You are looking for a Fibonacci reason why the market chose 'this peak' as wave (iii).

Next, we note that wave iii of (iii) is on a peak of the Elliott Wave Oscillator (EWO), and wave v of (iii) is on the divergence, as shown. Next we see the triangle wave (iv) has the classic wave four signature under The Eight Fold Path Method in that it travels to between +10% to -40% of the peak value in wave (iii). In terms of alternation, we note (iv) as a triangle, alternates with the sharp (ii), and iv, as a large flat, seems to alternate with the sharp ii. That also makes each of the fourth waves longer in time than their respective second waves.

Further, after applying the channel guidelines in the method, we note that wave (iv) did indeed attack the lower channel boundary, and then price had a quick rebound. So, we would expect we are in wave (v), and that wave (v) would show a divergence on the EWO. In terms of a price target, a (v) = (i) target would be a reasonable. That level is around 2,630. So, it is possible that the thrust out of the triangle only becomes a sub-wave one of (v) if needed to reach this point. If so, then there would be a second wave pull-back.

I need to say that reaching this target is not a foregone conclusion. Price is grinding along the underside of the channel now, and may be too tired. We'll see.

Have an excellent remainder of the weekend.
TraderJoe