As usual we being with an analysis of long-term picture and work our way into the smaller waves. Since 2009 there is still the possibility of a zigzag-family wave unfolding, but the higher price travels the less likely this scenario becomes. If a correction is unfolding a single zigzag is the preferred option where 'a' is to i, 'b' is to [2] as a flat, and 'c' is nearing completion. Wave 'b' of the zigzag can terminate at (2) as a triangle, but as discussed in the past it is difficult to find a good impulse labeling higher since (2) where a sideways correction is not underway beginning at 2014 [iii]. A double zigzag would require a pullback of similar size to ii, then another rally putting price even higher as it completes this more complex pattern.

In this update the options for wave counts higher beginning at [2] were discussed in detail and the following was concluded:

"First, a sideways corrective wave lower from 2014 [iii] is a reasonable possibility worth considering when used as a 4th wave that is paired with 2nd wave [2]. But the problem with this sideways correction is that price has rallied so far above [iii] with the ‘b’ wave being quite large relative to ‘a’. So it has been labeled “weak”, but just barely given that the larger impulse structure it is a part of is not bad.

An impulse higher unfolding since 2014 [iv] is weaker than the sideways pattern due to its complexity and the structural concerns within the larger impulse higher since 2011. This possibility is on-par with a pullback of similar size of (2) following (5)’s completion, then another impulse higher following; or a 2010-11 triangle with impulse higher completing at (5).

The poorest options involve an additional stretching of the impulse wave higher since 2011 where a 5th wave extension is taking place or the core of the impulse wave is in wave 5 territory. These are the remaining options discusses above.

The wave count in color is strongest because the other possibilities have at least one undesired feature that it does not have. It stands out by a good amount in this regard."

The ensuing price action since the wave (4) low is very likely an impulse. A double zigzag with 'w' to [iii] ('a' of 'w' to 1, 'b' of 'w' to [ii]), 'x' to [iv], and 'y' underway ('a' of 'y' to 3, 'b' of 'y' to '4') is possible, but the size of 'x' is small relative to the 'b' waves within the two zigzag legs and the pattern only works as an ending diagonal underway since the wave (4) low, a pattern not often seen. Furthermore the large space between the April-May and June-July congestion areas that is [iii] is characteristic of an impulse wave, not a zigzag-family wave.

Last time it was stated, "1960-area support should prove to be the farthest that any selling travels (if there is still a wave 4 triangle underway...)." Although this move appeared unlikely due to the short-term structure (especially after the morning drop and (x) of [e] wave), the structure of [d] not preferred as a double zigzag, and the fact that there was already a pleasing complete triangle structure to (x) of [d], price move to this level anyways and actually a bit under in a fear-like move. The rebound was strong and the waves in the wave 4 region, particularity [d] and [e], look very corrective. Unless 5 truncated as an extremely small 5 waves to [i] at the Friday high, the structure higher since (4) is not yet complete.

A correction in the wave 4 region can be incomplete, for example there can be a flat higher since [c] within a flat down since [b], but the region grows to a very large size relative to any correction that came before it since (4). If a correction is still underway and if there is not to be a massive correction down still incomplete since [iii], there must be a impulsive subdivision as described above where 4 is underway since subdivided 3. Clearly an extension of 4 only worsens the proportionality of it in relation to previous corrective waves. Just one simple, quick move back down to 4 or [a] is very likely not enough to give a reasonable structure that is a different complete sideways correction.

The overlap of a of (y) and then total retracement of b of (y) give a very corrective look to wave [e]. 5 wave higher since [e] that may be an impulse or just a set of 1-2 waves unfolded following the Thursday low. A flat higher since [c] works with the structure seen over the past two weeks, but again the larger structure does not work well with it.

Read my final analysis and our consensus at http://ewaveanalytics.com.

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