During these last two months I’ve struggled with the FTSE Elliott wave count. Choppy overlapping movement has been and is very difficult to analyse.
The trend remains the same, until proven otherwise. The trend is your friend.
It’s Christmas Eve here now, so charts only today. Merry Christmas everyone!
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Main Wave Count
Alternate Wave Count
Downwards movement invalidated the last wave count. FTSE may have had a cycle degree trend change, but this requires confirmation. If it is correct it should be confirmed within two weeks.
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The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is complete, but this trend change absolutely requires confirmation before any confidence may be had in this wave count.
Within cycle wave b (or x) there is no Fibonacci ratio between primary waves A and C.
Ratios within primary wave C are: there is no Fibonacci ratio between intermediate waves (3) and (1), and intermediate wave (5) is 12.29 points short of 0.236 the length of intermediate wave (3).
This is a huge trend change at cycle degree. I would only have confidence in this wave count when there is a full weekly candlestick below the lower edge of the maroon – – – channel, and not touching its lower trend line. Only when this confirmation is present will I calculate downwards targets for you.
I had expected intermediate wave (5) to continue higher, but it may have ended as a very short brief fifth wave which is common following barrier triangles.
I have adjusted the wave count within intermediate wave (4) to see the barrier triangle ending later. This changes the beginning and so end of intermediate wave (5).
If there has been a trend change then no second wave correction may move beyond the start of its first wave above 6,904.86.
A new high above 6,894.88 indicates FTSE has not had a big trend change. The upwards trend remains intact. Intermediate wave (5) is not over.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is incomplete.
The daily chart focusses on the last wave up, intermediate wave (5).
Intermediate wave (5) cannot be over. A new high above the end of minor wave 1 cannot be part of a new downwards trend.
At 7,247 intermediate wave (5) would reach 0.618 the length of intermediate wave (1).
Intermediate wave (5) must subdivide as either an impulse or an ending diagonal. An ending diagonal requires all the subwaves to be zigzags. Because minor wave 1 looks best as a five wave structure I expect that intermediate wave (5) is most likely to subdivide as a simple impulse.
Minor wave 3 may only subdivide as an impulse. Within it I am not convinced that minute wave ii is complete because although so far downwards movement subdivides as a three wave structure this is a very shallow brief movement, which is more likely to continue lower. Minute wave ii may end about the 0.382 or 0.618 Fibonacci ratios of minute wave i, with the 0.618 ratio as more likely because second wave corrections are most often deep.
Within minute wave ii minuette wave (b) must subdivide as a three wave structure and may make a new high above the start of minuette wave (a) at 6,904.86 as in an expanded flat. Minute wave ii may also be a double zigzag or double combination.
Minute wave ii may not move beyond the start of minute wave i below 6,528.73.
At 7,156 minor wave 3 would reach 1.618 the length of minor wave 1.
I expect FTSE has seen a big trend change, but this is unconfirmed. Only when the channel on the monthly chart is clearly breached will I have confidence in this wave count.
In the short term I expect some more upwards movement to 6,836, but not above 6,894.88.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is most likely incomplete. At 7,691 intermediate wave (5) would reach equality with intermediate wave (1).
I expect that intermediate wave (5) was typically very short following the barrier triangle of intermediate wave (4).
So far to the downside there is a leading expanding diagonal for a first wave, followed by a typically deep second wave correction which now looks to be incomplete.
Downwards movement for minute wave b is a clear three wave structure, and it is complete. Minor wave 2 looks like it is continuing as a larger expanded flat correction.
It is extremely likely that minute wave c will make at least a slight new high above the end of minute wave a at 6,833.67 to avoid a truncation. At 6,836 minute wave c would reach 1.618 the length of minute wave a. Minute wave a lasted a Fibonacci 13 days and minute wave b lasted a Fibonacci 8 days. Minute wave c may complete in a total Fibonacci 13 or 21 days, so the target at 6,833.67 may be reached in a further 9 or 17 days time.
Minor wave 2 may not move beyond the start of minor wave 1 above 6,894.88.
When minor wave 2 is finally complete then minor wave 3 downwards should show a strong increase in momentum, and must move well below the end of minor wave 1 at 6,643.62.
Movement below 6,646.62 invalidated the last daily Elliott wave count. I expect FTSE has seen a big trend change, but this is unconfirmed. Only when the channel on the monthly chart is clearly breached will I have confidence in this wave count.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is most likely incomplete. At 7,691 intermediate wave (5) would reach equality with intermediate wave (1).
I have moved the degree of labeling within intermediate wave (5) all up one degree. I expect that this fifth wave was typically very short following the barrier triangle of intermediate wave (4).
So far to the downside there is a leading expanding diagonal for a first wave, followed by a typically deep second wave correction.
I expect that a third wave down at minor degree has begun for FTSE. At 6,427 minor wave 3 would reach 1.618 the length of minor wave 1.
Within minor wave 3 no second wave correction should move beyond the start of its first wave above 6,833.67.
Minor wave 1 lasted 39 days. I would expect minor wave 3 to last about 21 or 34 days in total. So far it has lasted seven days.
Last analysis of FTSE expected downwards movement to complete a correction. The target was at 6,655.22. Downwards movement reached 6,643.62 (11.6 points below the target) and turned. I expect upwards movement from here to a mid term target about 6 – 8 weeks away at 7,271.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is most likely incomplete. At 7,691 intermediate wave (5) would reach equality with intermediate wave (1).
Intermediate wave (5) has begun. Sideways movement since the end of minor wave 1 at 6,894.88 is very corrective, and minor wave 2 subdivides perfectly as a zigzag. There is nice alternation within minor wave 2: minute wave a is a leading contracting diagonal and minute wave c is a swift impulse.
At 7,271 minor wave 3 would reach 1.618 the length of minor wave 1.
Intermediate wave (5) would reach equality in length with intermediate wave (1) at 7,691. Intermediate wave (5) lasted seven months. So far intermediate wave (1) is in its fourth month. In another three months it may end at equality in duration with intermediate wave (1).
Upwards movement from the low at 6,643.62 is a clear five on the hourly chart. This adds confidence to this wave count.
If price breaks below 6,643.62 then minor wave 2 may be continuing as a double zigzag, flat or combination. The invalidation point would move down to 6,507.08. However, at this stage I would consider this unlikely.
Last analysis of FTSE was invalidated by downwards movement. I had expected to see a long extended fifth wave following a fourth wave barrier triangle, but the fifth wave was very brief and was over already.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
There is no Fibonacci ratio between primary waves A and C.
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Cycle wave b (or x) subdivides as a zigzag and is most likely incomplete. At 7,691 intermediate wave (5) would reach equality with intermediate wave (1).
Intermediate wave (5) is unlikely to be over as the S&P 500 continues higher. This is the main reason for adjusting my FTSE wave count.
There is no Fibonacci ratio between intermediate waves (3) and (1). This makes it likely we shall see a Fibonacci ratio between intermediate wave (5) and either (3) or (1). Equality with (1) is the most likely ratio.
Within minor wave 2 the structure is unlikely to be complete. Minute wave a subdivides as a leading contracting diagonal. Minute wave b may not move beyond the start of minute wave a above 6,894.88. If this invalidation point is breached prior to more downwards movement then it must be that minor wave 2 would be over. Movement above 6,894.88 prior to a new low below 6,701.59 would indicate that a third wave upwards is underway.
Last analysis of FTSE was invalidated by downwards movement. I had expected to see a long extended fifth wave following a fourth wave barrier triangle, but the fifth wave was very brief and was over already.
Click on charts to enlarge.
The bigger picture sees FTSE in a huge correction for a super cycle wave (II).
Super cycle wave (II) may be either a regular flat correction (labeled cycle a, b, c) or it may be a double flat or combination (labeled cycle w, x and y).
There is no Fibonacci ratio between primary waves A and C.
A regular flat correction would expect a five wave structure downwards for cycle wave c to move at least a little below the end of cycle wave a at 3,460.71 to avoid a truncation. Cycle wave c would be expected to last from one to several years, with a shorter time frame more likely.
A double flat or combination would expect a three wave structure downwards for cycle wave y to end about the same level as cycle wave a at 3,460.71. Cycle wave y would be expected to last from one to several years, with a longer time frame more likely. It could look like a repeat of cycle wave a.
There is divergence at the monthly chart level with MACD which supports this wave count.
Intermediate wave (5) is most likely to be over as a short sharp wave following the barrier triangle of intermediate wave (4).
Ratios within primary wave C are: there is no Fibonacci ratio between intermediate waves (3) and (1), and intermediate wave (5) is just 0.62 points longer than 0.236 the length of intermediate wave (3).
Downwards movement from the high at 6,894.88 so far looks like it may be a complete leading contracting diagonal. This may be followed by a deep second wave correction to about 6,826.68 or above.
Thereafter, downwards momentum should increase for a third wave.
Movement below 6,507.08 would confirm this wave count.
A clear breach to the downside of the maroon – – – channel on the monthly chart would provide confirmation of this wave count at cycle degree.
This analysis focuses on the daily chart only. To see the last published analysis of a monthly chart click here.
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Last analysis expected that minor wave 4 was over at the low labeled here minute wave w within minor wave 4. Clearly with a new low that was not the case. The invalidation point was not breached.
Minor wave 4 continued lower as a double zigzag. It lasted a total of 22 days, compared to minor wave 2 at 8 days. However, although the durations are dissimilar they have an overall look that fits.
There is no Fibonacci ratio between minor waves 3 and 1, so I would expect we may see a Fibonacci ratio for minor wave 5 to either of minor waves 3 or 1. At 6,950 minor wave 5 would reach equality in length with minor wave 1, the most likely ratio for minor wave 5 to exhibit.
I would expect minor wave 5 to most likely reach up to and end about the mid line of the parallel channel.
Draw this channel using Elliott’s second technique: draw the first trend line from the ends of minor waves 2 to 4 then place a parallel copy upon the end of minor wave 3.
Once minor wave 5 can be seen as complete then this channel will provide first indication of an end to upwards movement with a clear breach below it. At that stage subsequent movement below 6,736.11 would provide price confirmation of a trend change.
At this stage within minor wave 5 no second wave correction may move beyond its start below 6,736.11. However, I would expect corrections along the way up to find support at the lower edge of the channel.
Minor wave 1 lasted 11 days so I would expect minor wave 5 to be about the same duration. So far it has lasted only three days.
Upwards movement continues as expected. The short term target is 6,853. The target for upwards movement is now calculated at two wave degrees and is slightly widened to a two point zone between 7,342 and 7,345.
Movement above 6,865.86 has provided full and final confidence that the intermediate degree trend is up.
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This main wave count expects that FTSE remains within a huge super cycle expanded flat correction. My alternate idea would be more in line with my bullish main wave count for the S&P 500: the FTSE may have ended its correction at 3,460.71 in March 2009 and that may be where a new bull market began.
The subdivisions and expectations for the mid term are the same for both ideas and so I will publish only one at this stage. When the next intermediate degree wave upwards is complete then I would use the lower edge of the maroon channel to differentiate between a long term bullish and bearish outlook. A bull market should breach the upper edge of this maroon channel, and it should not breach the lower edge. A bear market must breach the lower edge of this maroon channel.
If this upwards movement is a zigzag for a cycle degree b wave then it is incomplete. At 7,103.67 or above cycle wave b would reach 105% the length of cycle wave a. This would see the flat an expanded flat which is the most common type, and so movement above this point is reasonably likely.
In the mid term if we see more downwards movement then intermediate wave (4) may not move into intermediate wave (1) price territory. This wave count is invalidated with movement below 5,989.07.
Intermediate wave (4) may have ended as a running barrier triangle with the B-D trend line essentially flat.
Following a barrier triangle in a fourth wave position the fifth wave is often either a short sharp movement, or an exceptionally long extension. A long extended fifth wave would be less likely in this case as that would make cycle wave b longer than the maximum common length of 138% the length of cycle wave a (cycle waves seen on the monthly chart). So a short sharp fifth wave (relative to intermediate waves (1) and (3)) is more likely.
At 7,345 intermediate wave (5) would reach equality with the widest part of the triangle. At 7,342 minor wave 5 would reach 2.618 the length of minor wave 1.
Minor wave 3 is now complete and has no Fibonacci ratio to minor wave 1. I would expect minor wave 5 to exhibit a Fibonacci ratio to either of minor waves 3 or 1.
I have drawn a parallel channel about intermediate wave (5) using Elliott’s first technique: draw the first trend line from the ends of minor waves 1 to 3, then place a parallel copy on the end of minor wave 2. Minor wave 4 remains within the channel. Another parallel trend line on the end of minor wave 4 may also be useful for showing where upwards movement is finding support.
At this stage it looks like minor wave 5 is extending, and has begun with two overlapping first and second waves. This indicates some increase in upwards momentum should occur over the next few days.
If minor wave 4 were to continue further it may not move into minor wave 1 price territory below 6,706.34.