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Last week’s hourly wave count expected upwards movement for the first part of the week to be followed by downwards movement, which is exactly what happened, although the short term target for upwards movement to end about 13,459 was comfortably exceeded.

This structure is unfolding as expected.

I have still two daily wave counts which differ at cycle degree. Members may review monthly charts here.

Click on the charts below to enlarge.

First Daily Wave Count.

DOW first daily 2012

This first wave count looks at the possibility that the Dow is in a very large expanding triangle unfolding at super cycle degree. However, expanding triangles are the rarest of all Elliott wave structures.

The daily chart shows the subdivisions of wave (C) black which must subdivide into a five wave structure. It is subdividing as an impulse.

Downwards movement may not be a fourth wave within an extension of wave iii pink. It may be a fourth wave two degrees higher, at blue (minor) degree.

Wave 2 blue was a zigzag. I would expect wave 4 blue to exhibit alternation and be a flat, double or triangle.

Within wave (C) black wave 3 blue is complete.

Wave 4 blue is incomplete.

When wave 4 blue is complete then the target upwards may be calculated at blue degree also. At 14,969 wave (C) black would reach equality in length with wave (A) black.

Wave 4 blue may not move into wave 1 blue price territory. This wave count is invalidated with movement below 12,977.57.

DOW hourly 2012

Wave 4 blue may be unfolding as a zigzag structure. Within it waves a and b pink are complete. Wave c pink is incomplete.

Within wave c pink waves (i) through to (iv) may be complete. Only the final fifth wave is required to complete this structure at all wave degrees up to minor (blue).

In the short term if wave (iv) green moves any higher then it cannot move into wave (i) green price territory. This wave count is invalidated in the short term with movement above 13,511.08 (before wave (v) downwards may be considered complete).

When wave (v) green may be considered complete then subsequent movement above 13,511.08 would provide strong confidence that the upwards trend has resumed as at that stage upwards movement may not be just a fourth wave correction within wave c pink and so wave c pink would have to be over.

At 13,255 wave c pink would reach equality in length with wave a pink.

Wave 4 blue may end about the lower edge of the parallel channel drawn here about this zigzag using Elliott’s technique for a correction.

Wave 4 blue may not move into wave 1 blue price territory. This wave count is invalidated with movement below 12,977.57.

Second Daily Wave Count.

DOW second daily 2012

At the monthly chart level this wave count sees a double flat unfolding. Within the second structure of the double, a flat at super cycle degree, cycle wave a is itself unfolding as a flat correction with a three wave structure for primary wave A and a three for primary wave B incomplete.

However, primary wave B is over 138% the length of primary wave A which reduces this wave count in probability, making it more even with the first daily wave count.

Within wave C blue waves i, ii and iii pink may all be complete. This wave count sees downwards movement also as an incomplete fourth wave but one degree lower so the hourly chart will suffice for this wave count also.

Wave C blue has already passed equality in length with wave A blue. The next target is at 14,046 where wave C blue would reach 1.618 the length of wave A blue.

Wave iv pink may not move into wave i pink price territory. This wave count is invalidated with movement below 13,128.64.