The S&P 500 has moved higher to the target from our last analysis. We did however first expect a correction before the upwards movement to the target.
Both wave counts from yesterday remain valid and we present a third possible hourly wave count that expects a trend change.
Click on the charts below to enlarge.
The main and first alternate hourly wave counts expect that the structure for wave c pink is still incomplete and that we should be seeing a little further upwards movement. Our second alternate wave count expect that we have seen the end to wave c pink and therefore wave (2) black and that a top is in place.
Until the main and first alternate hourly wave counts are invalidated we would expect it is more likely that the trend would continue even if only for a day or two.
Waves a and b pink both lasted a Fibonacci 8 days. Wave c pink has now lasted 20 days. The next Fibonacci number in the sequence is 21 which would see wave c pink end this Friday the 20th of January. However, Fibonacci time relationships are not as reliable as Fibonacci price ratios between waves so this date is a rough guide only.
At 1,311 wave c pink would reach equality with wave a pink and we may see the correction for wave (2) black complete here. This target has now been reached and exceeded by 4 points. A target based on the next likely Fibonacci ratio would see this wave count invalidated.
When this parallel channel is breached by downwards movement then we shall have confirmation that wave Y blue zigzag is over and wave (3) black downwards should be underway.
Wave (2) black is a double zigzag, which is a relatively common structure. Triple zigzags are relatively rare structures, and when the second zigzag for wave Y blue is complete the probability that wave (2) is over will be very high.
Wave (2) black may not move beyond the start of wave (1) black. This wave count is invalidated with movement above 1,359.44.
Main Hourly Wave Count.
This main hourly wave count has the best fit in terms of proportions, and for that reason it may have a slightly higher probability than the alternates.
The trend channel is constructed to contain most of the price movement within wave c pink and we may see wave (v) green end in the middle or at the upper trend line of this trend channel.
A ratio within wave (v) green is: wave iii orange is 1 point longer than wave i orange.
Wave (v) green may be unfolding as an ending diagonal as wave i orange within wave (v) green is best counted as a zigzag. Within an ending diagonal all the sub waves are required to subdivide into zigzags and the fourth wave has to retrace into the price territory of the first wave. According to this wave count, which sees wave iii orange as likely complete, we would need to see a deep retracement into the price territory of wave i orange and this provides us with a minimum target at 1,303. The structure for wave iv orange has to unfold as a zigzag.
Once wave iv orange completes we expect to see a final zigzag move higher to complete the correction for wave (2) black.
At 1,318 wave (v) green would reach equality with wave (i) green. This target is 7 points above the target for wave c pink which has already been reached and is 3 points above the most recent high. There is however an adequate Fibonacci ratio for wave (iii) green with wave (i) green and therefore it makes a ratio for wave (v) green to either of waves (i) or (iii) green less likely.
Movement below 1,290.99 would invalidate this wave count as wave iv orange within the ending diagonal for wave (v) green may not move beyond the start of wave iii orange.
Alternate Hourly Wave Count.
This alternate wave count differs in the degree of labeling and sees wave (iii) green as incomplete. It expects the ending diagonal is wave v orange within wave (iii) green.
This alternate has the same expectation for next movement as the main wave count. It expects one more fourth wave correction on the way up than the main wave count.
The parallel channel drawn here is Elliott’s second technique. Wave v orange is likely to test the upper trend line of this trend channel.
At 1,318 wave v orange would reach equality with wave i orange, the same as the target for wave (v) green on the main hourly wave count.
The invalidation point is the same as the main hourly as wave 4 purple within wave v orange may not move beyond the start of wave 3 purple within the ending diagonal for wave v orange.
Alternate Hourly Wave Count 2.
This second alternate wave count looks at the possibility that wave (2) black may have completed in the last few hours and that further downwards movement will now be seen within wave (3) black.
Wave (v) green within wave c pink is seen as a five wave structure with a very quick first wave labeled i orange.
Ratios within wave (v) green are: there is no adequate Fibonacci ratio for wave iii orange with wave i orange and wave v orange is .08 shorter than 2.618 the length of wave i orange.
If this wave count is correct then wave (2) black has ended within the target zone calculated making use of pink and green degree as explained in the main hourly wave count above. A third target is at 1,315.57 where wave v orange would reach 2.618 the length of wave i orange. This has provided us with a very high probability target zone.
Movement below 1,290.99 would provide confirmation for this wave count as both the main and first alternate wave counts would then be invalidated. This confirmation may also coincide with a breach of the bottom trend line of the trend channel constructed about wave c pink to contain price. This would greatly increase the likelihood of this wave count.
Movement above 1,315.49 would invalidate this wave count as no second wave correction within wave (3) black may move beyond the start of the first wave. This invalidation point is very close and therefore it may be invalidated rather quickly if incorrect.
This wave count expects downwards movement, the other two wave counts presented above also expect short term downwards movement.
Hi Lara could you please take a few minutes to update the gold charts? would really like to see your view here…thanks..LJ
I may be able to get to this in the next week, however I’m launching a new website which is what is taking up a lot of my time.