Larger Wedge

Yesterday, I posted the hourly wedge. I clearly stated that "right now" there are only three-waves-up, and, yet, the market could easily make it five-waves-up with some higher highs. Transferring that over the ES Daily chart, below, the price structure is just now at the point where the larger daily contracting diagonal I referred to earlier might be able to be visualized. I said at the time, "downward overlap was needed" before I would post that alternate, and that was obtained earlier in the week.

Right now - as it stands - wave ((iii)) is not only shorter in price, but also, shorter in time than wave ((i)) as you can see from the two 46 bar time rulers. Wave ((iii)) occurs on a lower peak of the MACD. Wave ((iv)) is shorter in price than wave ((ii)) but it nicely overlaps wave ((i)).

We said in yesterday's post from the hourly structure this up wave currently counts like a "three", but it could still easily turn into a 'five'. If that occurs, then it would make a good (a) wave, up, and it's correction might be the (b) wave down of ((v)), up.

If you suggest otherwise counts, you need to tell me what you are going to do with that middle (a) wave? As it stands right now, it is very long in time, but still meets the requirements of a sub-wave of ((iii)) because it is shorter in price & time than all of wave ((i)), the previous higher degree wave in the same direction. Further, the wave after it not only overlaps wave ((i)), it overlaps that wave (a). How does your suggested count get around those two issues?

If price makes an (a), (b), (c) up from here then it might be the wave that provides the typical 'over-throw' for the daily wedge - which the price pattern is clearly in. Divergences with the NYSE adv-dec line still remain. The Dow is still diverging from the transports. The VIX is still diverging from the S&P500 with a higher low at this time. And, check out the $cpce - for some reason there is a "whole lot of put-buying going on" at this market high instead of call buying.

This additional chart was added on Sunday morning, after much of the discussion in the comments, below. It is of HYG, the High Yield Bond ETF which is often taken as a measure of "risk on".

HYG - Daily Line Chart - Diagonal

 

The last time I saw such a structure across this many days, weeks and months was back in February of 2015, before calling the May 2015 top. Many web-sites were calling for a very large wave "three" at this point, not five to end a move. Their 'three' didn't materialize then. Will it now? We can not be certain but the pattern is probabilistic.

This chart of Crude Oil was also added on Sunday morning. The two day chart shows another "wave in a wedge."

The first wave actually starts from the craziness of when Crude Oil futures dropped below the $0 mark and traded below the -$35 to -$40 range. Thus, it appears the first wave is the extended wave in the sequence. The second wave retrace is much, much less than a 23% retrace after the oil-shock low. After a lower third wave peak, the EWO got within about 10% of the zero line signifying a fourth wave, and has since made a lower peak. Most recently, price has fallen off in a larger wave than those shown in wave four, and the EWO is red and declining. It is possible that five-waves-up are completed, and this may coincide with the introduction of the micro-Crude Oil futures on the CME.

Again, nothing here is to be taken as trading or investment advice. This is a description of a potential Elliott Wave pattern which has a probability only.

This is the second post this weekend, and it builds on yesterday's notes so you may want to read them now.

Have a good rest of the weekend.

TraderJoe