DJIA Elliott Wave Analysis – 6th January, 2012

Elliott Wave chart analysis for the DJIA for 6th January, 2012. Please click on the charts below to enlarge.

DOW daily 2012

Wave (2) black is seen as an incomplete double zigzag correction with a zigzag for wave W blue joined by a three for wave X blue. Within the last zigzag labeled Y blue waves a and b pink are complete.

Further upwards movement is expected within wave c pink of wave Y blue of wave (2) black.

At 12,761.30 wave c pink would reach equality with wave a pink. Once the fourth wave within wave c pink is complete then we may be able to calculate a more accurate target making use of two different wave degrees.

The trend channel was constructed about wave Y blue by connecting the start of wave a pink to the end of wave b pink and placing a parallel copy at the end of wave a pink. We may see wave c pink finish in the middle of this trend channel or more likely at the upper trend line.

Movement above 12,876 would invalidate this wave count as wave (2) black may not move beyond the start of wave (1) black.

Movement below 11,735.19 would invalidate this wave count as no second wave correction within wave c pink may move beyond the start of the first wave.

DOW hourly 2012

This main hourly wave count sees waves (i) and (ii) green within wave c pink as complete.

Wave (iii) green is seen as subdividing into orange degree with waves i and ii orange complete.

Wave iii orange has subdivided into purple degree with waves 1 through 4 purple complete. Wave 4 purple is seen as a triangle. This triangle may be an early indication that we should expect a sharp sudden upwards movement once the triangle completes – it may already be complete.

Upwards movement is therefore expected within wave 5 purple to complete wave iii orange.

There is no adequate Fibonacci ratio for wave 3 purple with wave 1 purple and therefore it is more likely that we would see an adequate ratio for wave 5 purple with either of waves 1 or 3 purple.

Movement above 12,435.83 would provide confirmation for this wave count as the alternate hourly would then be invalidated.

At 12,615.05 wave 5 purple would reach equality with wave 3 purple and at 12,671.63 wave iii orange would reach 1.618 the length of wave i orange. This provides us with a 56 point target zone within which we may see wave iii orange complete.

Movement below 12,261.95 would invalidate this wave count as wave 4 purple may not move into the price territory of wave 1 purple.

Alternate Hourly Wave Count

DOW hourly alternate 2012

This alternate hourly wave count expects wave c pink is unfolding as an ending diagonal that would require all the sub waves to subdivide into zigzags.

We can count zigzags for waves (i) through (iii) green and we expect wave (iv) green has completed waves a and b orange which means wave c orange is required to complete this zigzag.

Ratios within wave c pink are: wave (iii) green is 28 points shorter than .618 the length of wave (i) green. Within wave (iii) green wave c orange is 16 points longer than 1.618 the length of wave a orange.

Movement below 12,261.95 would confirm this alternate wave count as the main hourly would then be invalidated.

At 12,241.02 wave c orange within wave (iv) green would reach equality with wave a orange.

The trend channel is constructed about wave (iv) green according to Elliott’s channeling technique by connecting the start of wave a orange to the end of wave b orange and placing a parallel copy at the end of wave a orange. We may see wave c orange end near the bottom trend line.

Once wave (iv) green is complete and price breaches the upper trend line with a full hourly candle above it then it is likely that we would see further upwards movement. We can however not calculate a target yet as wave (iv) green is incomplete.

We do however expect wave (v) green would not be longer than 338.50 as it would then make wave (iii) green the shortest wave violating one of Elliott’s rules.

A short term invalidation point is at 12,435.83 as no second wave correction within wave c orange may move beyond the start of the first wave.

Movement below 12,140.36 would invalidate this wave count as wave (iv) green may not move beyond the start of wave (iii) green within a diagonal.