Market Indexes: Major U.S. Equity Indexes closed lower
SPX Candle: Higher High, Lower Low, Lower Close - Outside Reversal (Bearish Engulfing) Candle
FED Posture: Quantitative Tightening (QT)
Near mid-day today, the S&P500 cash market made its highest high for the up move, so far. And then, after the Federal Reserve Press Conference, prices backed off, and made a lower daily low, and lower daily close.
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| S&P500 Cash Index - Daily - Outside Day Lower |
In doing so, the Elliott Wave Oscillator (EWO) turned in a red daily histogram bar on the chart above. In looking at the wave since the low of minute ((ii)) on May 30, on the hourly chart, below, we see the impulsive structure is still in tact.
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| S&P500 Hourly - Since low of Minute (ii) on May 30. |
There are several factors that make us think that we are still in fourth wave within minuet i. First is the simple fact that there has not been a 38% retracement yet. That level is shown on the chart. Second is since the initial rise on May 30, and decline into May 31 (sub-minuet waves .i and .ii), there is a clear five wave structure shown for you as brown -i to -v, which is likely the sub-minuet wave .iii. Within that wave, there is good alternation with brown -ii as a FLAT, and and brown -iv as a non-overlapping sharp.
Thus, to further the case for alternation, if sub-minuet wave .ii is a sharp, then wave sub-minuet wave .iv should be a flat. And today's marginal higher high, could have fit the bill for the -b wave of such a flat. Today's closing price is already below the -a wave of such a flat, fulfilling the 'minimum' expectation for such a flat wave. It can go lower.
Roughly following The Eight Fold Path Method, wave -iii of .iii should be on the peak of the EWO, and wave -v of .iii should be on the divergence, as we have it shown. We also see that wave that part of wave .iii is currently above the upper channel line, showing where the most momentum is. Then, lastly, the EWO is nearing the zero line for what may be the wave .iv signature. It would certainly be possible for price to attack the lower channel line. Of course, any significant overlap of wave .iv with wave .i would invalidate the potential fourth wave, and mean the upward move had already crested.
With the ECB meeting tomorrow, it bears keeping an eye on it.
Have a very good start to your evening.
TraderJoe
The brown -iii is round about 10 points shorter than brown -i. Is this allowed?
ReplyDeleteHi Thomas. Yes, the lengths of the brown waves are -i = 48.34 pts, -iii = 40.39 points, and -v = 30.05 points, so wave -iii is not the shortest as wave -v is shorter. The rule is that wave three is never the shortest, not that it is always the longest.
DeleteThanks for your exlanation. I thought wave iii must be the longest wave in an impulse based on the price. Anyway, your labeling (prediction) is awesome!
ReplyDelete