Wednesday, May 7, 2014

5/7/14 Elliott Wave Update

Last time it was stated, "there is no change to the Elliott Wave options in the long term.  In relation to the ending diagonal options, a sideways pattern since (1) remains a lesser option due to the complexity and proportionality of the pattern."  The same remains true today.  Obviously a new all-time high is required if one of the ending diagonal options is correct.
There are still several good options to explain the rally higher since the March 2009 low.  It remains to be seen whether this is a multi-year zigzag correction or an impulse higher.

The possible flat lower since (3) has been removed as an option.  The reason is that the last all-time high was never reached and the [b] wave can now essentially only be counted as a double zigzag.  A flat options from A in February to (4) remains weak.
The best options in the chart above are a sideways pattern since A in April (with a triple zigzag underway since [b]) and a triangle which the count in color represents (the upper dotted blue line is the symmetric line where [d] is projected to terminate).  Both of these options obviously suggest that a correction since A is incomplete.  If prices continue to move higher from today's low, a diagonal since the (4) or [a] low is most likely underway.  But a sideways correction is a stronger option.

There is clearly a corrective structure lower since [b] and this is a bullish feature.  The very corrective looking rally higher from today's low is an indication that a larger corrective pattern is not yet complete however.  Triple zigzags are rare, but a zigzag move down to 1850 following at most a very minor rally tomorrow morning would be a well-proportioned triple zigzag move.  If 1881 is broken to the upside, the triangle count will remain a strong option.  The diagonal choices from the (4) or [a] lows will not gain much of an advantage until 1886 is exceeded.  Even then it will not be certain whether or not a sideways pattern is still underway since the April A high until the size in price of [b] is exceeded by the move.
Bottom Line:
Last time the short-term summery was marked at "bearish".  Price did retreat.  It was also stated that, "the waves higher since the 28th look corrective.  Since there were 3 waves higher that nearly made a new all-time high above (3), the medium-term remains bullish.  A test of the 1815 level remains possible, but ~1845-1850 should hold prices."  Due to the zigzag action lower since [b], it is now unlikely that ~1845-1850 will not support prices before a new all-time high.  This appears to be a very good buying level for a trade with limited risk, if prices reach that low.
While things look bullish in the medium-term, a consolidation period looks incomplete in the short-term.  If prices continue higher since [c] without making a lower low and exceed 1886, things will look more bullish, but this scenario is not that likely.
short-term (hours to days): sideways
medium-term (weeks to months): very bullish
long-term (months to years): bearish
very long-term (years-decade): neutral

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