My understanding of Elliott's second parallel technique is that once a fourth wave location in an impulse is identified, then a line is drawn from wave two to wave four and a parallel is placed on the end of wave three, as below in the ES 4-hr chart.
So far, the ES is back to the 38% retrace level or thereabouts. The EWO has turned green with about 108 candles on the chart, and it is still in the range of -40% of the maximum negative reading (i.e. two negatives make a positive reading). And there is alternation with wave (ii)/(b) at this point. At minimum a lower low is needed for an impulse wave. And, often, a fifth wave, should it occur can equal wave (i) in price, with a secondary target of (v) = 0.618 x [net ( (i) through (iii) )].
Please keep in mind, if the Smart Money wants, this is the most likely location that they will try to bust the wave sequence from.
Have an excellent start to the evening,
TraderJoe
Thanks as always for sharing your wisdom!
ReplyDeletePlease refresh my memory: assuming we completed A-B-C down of wave A of wave 4 down, when wave A is this strong and short in time, does it reduce the probabilities of wave B to travel beyond the usual 61% or 78% recovery? Thanks!
It's kind of a murky question. Three waves down can resolve with any of these seven outcomes: 1. Five waves up in impulse to a new high. 2. Double-or-triple zigzag down. 3. Sideways triangle. 4. 90% or greater three-waves-up B wave. 5. Start of an upward diagonal, either contracting or expanding. 6. Additional leg down to make an impulse. 7. Multiple additional legs down to make a contracting or expanding diagonal, down. So, 'any' pattern is still a potential from here. What changes the odds is the speed of the prior decline, and its length. But it has little bearing on the % retrace - just whether we have likely begun a new trend lower or not. TJ.
DeleteThanks Tj.. 4 months old..https://www.youtube.com/watch?v=2euwJfpCxRQ
ReplyDelete