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Last week’s analysis expected upwards movement. Price moved lower during the week but has remained just above the invalidation point at 14,382.09 so far.

I have two new wave counts for you this week. We should always assume the trend remains the same until proven otherwise. For this reason my main wave count assumes there has been no trend change.

Click on the charts below to enlarge.

Main Wave Count.

Downwards movement for the week may be a fourth wave correction. There are several possible ways to label this long upwards movement of intermediate wave (C). This wave count sees minor waves 3 and 4 complete.

Minor wave 3 is 165 points short of 4.236 the length of minor wave 1. This is a 7.8% variation, less than 10% is acceptable.

Ratios within minor wave 3 are: minute wave iii has no Fibonacci ratio to minute wave i, and minute wave v is 32.39 points short of equality with minute wave iii.

Ratios within minute wave iii of minor wave 3 are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is just 0.5 points short of 0.236 the length of minuette wave (iii).

Ratios within minute wave v of minor wave 3 are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), 8.5 points short of 0.618 the length of minuette wave (iii).

At 14,984 minor wave 5 would reach equality in length with minor wave 1.

The channel drawn here uses Elliott’s second technique. Draw the first trend line from the lows of minor waves 2 to 4, then place a parallel copy upon the high of minor wave 3. Minor wave 5 may end midway within the channel, or should find resistance at the upper edge. When the channel is clearly breached by downwards movement we shall have an indication of a possible trend change.

Minor wave 4 is most likely to be over as a zigzag. However, if it continues sideways as a triangle, flat or combination it may not move into minor wave 1 price territory. This wave count is invalidated with movement below 13,011.45.

Minor wave 4 subdivides into a zigzag. Within it minute wave c is 4.33 points longer than 0.618 the length of minute wave a.

Ratios within minute wave a are: minuette wave (iii) is 12.84 points longer than 2.618 the length of minuette wave (i), and minuette wave (v) has no Fibonacci ratio to either of minuette waves (i) or (iii).

Minute wave a is an impulse and minute wave c is an ending diagonal.

The channel drawn here about minor wave 4 is a best fit. When this channel is breached by upwards movement we may have a little more confidence that minor wave 4 is over and minor wave 5 is underway.

Within minor wave 5 no second wave correction may move beyond the start of its first wave. This wave count is invalidated with movement below 14,444.03.

Alternate Wave Count.

There are several possible ways to label upwards movement for intermediate wave (C). This alternate looks at the possibility that it may be over.

This is a very big trend change. The new downwards trend is at cycle degree and should last one to several years. It should take price substantially below 6,469.95. It is wise to wait for confirmation of this trend change before having confidence in it.

There is no Fibonacci ratio between intermediate waves (A) and (C).

Ratios within intermediate wave (C) are: minor wave 3 has no Fibonacci ratio to minor wave 1, and minor wave 5 is 10.49 points longer than 0.236 the length of minor wave 3.

Ratios within minor wave 3 are: minute wave iii is 91.21 points longer than 1.618 the length of minute wave i (an 8% variation which is acceptable), and minute wave v has no Fibonacci ratios to either of minute waves i or iii.

Ratios within minute wave i are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 3.41 points short of 0.618 the length of minuette wave (iii).

Ratios within minute wave iii are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 8 points short of 0.236 the length of minuette wave (iii).

Ratios within minute wave v are: minuette wave (iii) is 10.89 points longer than 1.618 the length of minuette wave (i), and minuette wave (v) has no Fibonacci ratio to either of minuette waves (i) or (iii).

This wave count has a better fit than the main wave count. The difference is within minuette wave (iii) of minute wave v of minor wave 3. For this alternate this piece of movement subdivides nicely into a five wave structure.

Within the new downwards trend no second wave correction may move beyond the start of its first wave. This alternate is invalidated with movement above 14,887.51.