Nearing the High

Yesterday, our post included the possibility of a fourth wave triangle to better equalize the time spent in a fourth wave with the time spent in a second wave. Today's trading broke outside the channel and did create a triangle as shown on the continuing chart, below.

ES E-Mini S&P500 Futures - 30 Minutes - Triangle & Thrust

We counted out this triangle live and in almost real time for readers here. It is not our intent to do that often, but we wanted you to see how The Eight Fold Path Method can help predict the path of a potential impulse wave. Besides better equalizing the time between waves two & four, the triangle also helps provide alternation. Notice that the running wave (ii) has its b wave over the high of wave (i). The triangle with it's lower b wave than wave (iii) is the reason that a triangle was a good alternate for the fourth wave.

A further purpose of the triangle is to take up more time than wave (iii). And this it does, as well.

You will also note that as a cross-check, the EMA-34 shows that every significant numbered wave in the impulse - as well as the significant lettered waves in the triangle - are on an opposite side of the average which provides excellent form and balance. Notice, too, that the triangle brings the final reading of the Elliott Wave Oscillator for the fourth wave much closer to the zero mark than does that first a wave of the triangle.

At the end of the day (actually after the close of the cash session), the futures popped, and are likely providing that fifth wave. As such, wave (v) is bumping up against the underside of that channel. Does the market know that channel is there? Prices keep on being drawn to it at (i), (ii), (iii), a, b and (v). The triangle was largely expected as 'consolidation' after the first-of-the-month, and first-of-the-quarter inflows, news on trade talks and the lighter holiday volume.

At the end of the day, wave (v) is well beyond a 78% retracement - the minimum needed to claim a truncation - so even if we never see higher prices, the wave will be counted as a fifth wave.

There is another brief alternate, and that is that prices form another type of triangle from the same set of waves - and that is a "barrier triangle". This is not required, but it could happen. For that to occur, then the cash price should attempt to bang into a horizontal line drawn from wave (iii) a couple of times before popping the high. This could happen, we'll watch for it.

Have a good start to your evening.

TraderJoe