Thursday, June 18, 2020

Flexibility Required - 2

Here is today's chart. Earlier in the day, I said there 'could be' a triangle forming inside the larger diagonal wave shown in yesterday's post. The objective of the larger diagonal is to make a lower c wave than a, to avoid a truncation. Notice how flat the MACD is right now? That is often one sign of a triangle in progress.

ES Futures - 30 Minutes - Possible Internal Triangle

As of the futures settlement, nothing has occurred  to invalidate the internal triangle count shown with the dotted lines. If a true triangle is formed, it might signal 'last waves of the diagonal dead ahead'.

If the lower c wave than a wave is made, that would mean the market has the typical strength of a downward correction. If invalidation occurs at the orange dotted line before a new low is made below a, and the truncation is allowed to persist, that would typically indicate the market has more than usual upward strength. As you can see already, this c wave has occurred at - is occurring at - a much more shallow angle of descent than the a wave. This already is supposed to mean the market has more upward strength because the upward pull of the market is bending the downward c wave to the right. This is not what the crash enthusiasts wanted to see. Their third wave should be headed straight down right now, instead of the market still flip-flopping around the 3,100 level...

And we may get a good swift kick in the pants yet. The last wave of a diagonal is itself always a .c wave of (v), and they can be doubly dramatic for that reason. But not so far ...

Such a  wave might be on tap for an overnight session, depending on the news, company announcements, etc.

If and only if the a wave low is broken could the alternate count - shown in red - begin to be considered. Right now, it is on the chart for completeness. But, it is the market that has to prove the case that the red count is even viable, let alone increasing in odds. As of this writing such a count is not even viable unless the larger diagonal completes properly.

P.S. If invalidation occurs a perfectly countable diagonal ended with the wave at (iii), and we will recognize the truncation.

Have a very good start to the night.
TraderJoe






5 comments:

  1. Thanks for the update. Is there something that speaks against moving your black (i) (ii) (iii) up one high/low and counting an expanding diagonal completed with (v) where you got (iii)? That would mean your (iv) is an (a) with (b) completed and (c) finishing soon above where you show the .b invalidation.

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  2. Amazing call . I’ve always followed your diagonal analysis and I’d say you’re expert looking at them . Great work

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  3. Hi TJ:
    It appears the gap left with the 333.48 close on 2/21 is acting as a magnet. I note the 100% extension of the trend retracement from 12/26/18 (233.76) to 5/1/19 (294.95) retrace low 6/3/19 (273.09) = 334.28 is worth watching as well as the 76.4% projections off the next two from below, are: 3/23 to 5/14 (331.53) and 5/14 to 6/15 (335.26).

    Also, the two most recent trend retracements project some close clusters from the same Fibonacci percentages. These come in either near the 339.08 High using 85.44% or above that High using 100%:
    3/23 (218.26) to 4/29 (294.88) retrace 5/14 (272.99): 85.44% = 338.45 and 100% = 349.61
    5/14 (272.99) to 6/8 (323.41) retrace 6/15 (296.74): 85.44% = 339.82 and 100% = 347.16
    If today's low is a third retrace, then:
    6/15/20 (296.74) to 6/16 (315.64) retrace 6/18 (309.51): 161.8% = 340.09
    Thank You for your terrific work.

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    1. Thank you Tim:
      The gaps often turn from attract to repel once reached. We also have the 4 day island overhead with the close on 6/10 at 319.00 which makes a reasonable interim target.
      The third retrace I mentioned was taken out 6/19 with the 306.53 low (50% is 306.19) which now projects with 161.8% to 337.11. IF the SPY works lower to the 61.8% which is 303.96, the 161.8% target will be 334.54.

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