The cash SPY weekly chart is below. IF there is to be an Expanding Leading Diagonal (of the 3-3-3-3-3 variety) then wave Minor 5 'must' become longer than wave Minor 3. To that end a Fibonacci ruler is shown on the right to give typical expansion levels. Note the prior weekly up channel in magenta. Wave 2 found resistance at the 'mid-channel line (dashed)'. So far, wave 4 has found resistance at the lower channel line. Resistance was previously found at this location in the upswing at the end of May.
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| SPY Cash - 1 W - Potential Expanding Diagonal |
We already know that potential wave Minor 4 is longer in price and longer in time than wave potential Minor 2. That fits with the characteristics of a potential expanding diagonal. We know that wave Minor 3 found support near the level of prior wave Intermediate (W) which was made during the upward wave.
Will potential wave Minor 5 find support near the level of Intermediate wave (X) from October 2020 and the prior high in February 2020? If it does, we will label it Intermediate (1), down. But, if it does not and keeps on going to the 2020 low, then we will label the whole downward structure with Intermediate sized waves, and it will become (1), (2), (3), (4), (5) to Primary [C], down.
The tentative uncertainty in degree labeling comes from the fact that the downward wave structure is not yet larger in price than Intermediate (C) - down - of Primary [A], down. But, because it is larger in time, we can see the possible need to increase the degree of the waves.
Have an excellent start to the weekend.
TraderJoe
Thanks TJ.
ReplyDeleteInteresting that SPX A/D line made a new ATH on 8/16.
ReplyDeleteDoes an expected deep retrace also apply to diagonals of the expanding variety?
DeleteThe Elliott Wave Principle (Chapter 4) merely says, "A leading diagonal in the wave one position is often retraced by a zigzag correction of 78%". The statement makes no types of distinctions between types of leading diagonals (i.e. contracting or expanding).
DeleteOne issue will be there are have been few documented diagonals at this degree of trend - if this one comes to pass. So, there are few cases to go by. Another issues concerns the wave structure itself. IF this is an expanding diagonal, will it be (1) or (A), or will (5) take us all the way down to [C], as noted in the write-up above?
TJ
Ty!
DeleteConsidering we may be looking at the inception of a primary C wave down, I was wondering why an initial "A" wave would be a possibility. Is a larger C diagonal a possibility?
DeleteIf Primary [A] is in three waves, it 'could be' Primary [W]. The high of Primary [B] could then be Primary [X], and the low of Primary [C] could be Primary [Y] if it happens in three waves, not five. Thus, the diagonal could be Intermediate (A). But there are other reasons too. And I won't go into those now.
DeleteTJ
Got it!
DeleteSPY 30-min: the tentative count is based on the down leg now exceeding a 1.618 extension.
ReplyDeletehttps://www.tradingview.com/x/lRYuX5s1/
There are lots of gaps on the way down, so far.
TJ
AAPL has reached it's 2.618 fib from it's first wave. I could see this land the end of 5 or end of B right before Powell gets patient and flexible on Thursday.
ReplyDeleteGW - what do you make of the negative RSI HD from recent high and March high. That targets 3300’s. Thanks
ReplyDeleteTypically, in a downtrend, these HDs occur around/below the 60 level. As RSI (and its 9ma) have moved above/held the 60 level (range shift) before the move down, I would consider the neg HD suspect (could be wrong, of course). I would be watching the 40 level closely, with the possibility of a positive HD.
Deletethe rsi is quite low here, I'm wondering if this could be the end of another C with another high coming into September.
ReplyDeleteSPY cash 30-min: new lower low; 'might be' a 'b' wave in a flat or next impulse lower.
ReplyDeleteTJ
SPY - 411.35 closes the 8/10 gap
ReplyDeleteSPY - '22 selloff from an RSI perspective -
ReplyDeletehttps://www.mediafire.com/view/fbr9jvmthwrsf65/RSIperspective.PNG/file
Thank you!
DeleteA new post is started for the next day.
ReplyDeleteTJ