Fibonacci projections are estimated in the daily timeframe of the SPX to arrive at possible turning points or targets. All this talk about Elliott waves might be a little confusing, but try and wade through this blog to come to a better understanding of possible paths and turning points. Ralph Nelson Elliott in 1946 before his death wrote “Wave Principle, Natures Law-The Secret of the Universe.” Robert Prechter published R. N. Elliott’s works in 1980, in “The Major Works of R.N. Elliott.” Elliott wave theory has three elements which are pattern, ratio and time. This blog is about retracement ratios, which are used to determine retracement probabilities and turning points. The nomenclature for wave labeling as used in this blog has been developed by Tony Caldaro in Objective Elliot Wave analysis:
weekend update | the ELLIOTT WAVE lives on
The analysis uses nested Elliott waves: major, intermediate and minor, tracing the bull market from the 666 low, starting in March 2009. It is assumed that there was a failed intermediate fifth wave ending at SPX 1415 and not overtopping the intermediate fourth wave at 1422. The larger picture is a major wave III starting at 1075, in October, 2011 and ending at 1415, in April 2012. Major wave one was SPX 666-1371, ending in April, 2011. Major wave 2 was 1371-1075, ending in October 2012. This analysis assumes that major wave III is over (intermediate wave five failed to make a new high) and that major wave IV is now underway. Remember that in a bull market, major Elliott waves I, III and V advance, while waves II and IV are corrective. Advancing waves have five subwaves (intermediate waves), while corrective waves have three (A B C). These waves in turn have subwaves. The chart shows that recent intermediate wave one of major wave IV was 1415-1292 and is labeled as wave A, intermediate wave 2 was 1292-1335 and is labeled as B, and intermediate wave C is now underway.
For fibonacci ratio projections, I used two methods. The first is using the preceding major wave III from 1075-1422. The second is using the fibonacci relationships from the developing intermediate A and B corrective waves of major wave IV to estimate the turning points. From this analysis, we see that 1289 has been breached, so it is thrown out. Next we see a bottom area of 1248, but this level does not line up with much chart resistance. Below that we see a cluster in the 1208-1212 area, which lines up near the beginning of minor wave c of intermediate wave three from 1202 to1378. This projection, in my view, is in play. Further below, we see a cluster in the 1136-1149 area, which may have a lower probability at this time. This level is below intermediate wave two of major wave III, but above the 1075 low.
The chart also shows that the 50 ma is now sloping down, but above the 200 ema by 35 points (1349-1314), and above the 200 ma by 64 points (1349-1285). However, SPX has slipped below the 200 ma by the close on Friday, June, 1, which is a bearish sign. We see slight divergences on the RSI and slow stochastic. Because: 1) the market is below the 200 ma, 2) weak divergence development, and 3) fibonacci ratio projections lining up with strong support levels in the 1202-1212 area; my conclusion is that further downside is probable. But we always need to remember to trade what we see, and not what we believe. It’s going to be interesting to see how the market unfolds in the coming days. Thanks for reading.
weekend update | the ELLIOTT WAVE lives on
The analysis uses nested Elliott waves: major, intermediate and minor, tracing the bull market from the 666 low, starting in March 2009. It is assumed that there was a failed intermediate fifth wave ending at SPX 1415 and not overtopping the intermediate fourth wave at 1422. The larger picture is a major wave III starting at 1075, in October, 2011 and ending at 1415, in April 2012. Major wave one was SPX 666-1371, ending in April, 2011. Major wave 2 was 1371-1075, ending in October 2012. This analysis assumes that major wave III is over (intermediate wave five failed to make a new high) and that major wave IV is now underway. Remember that in a bull market, major Elliott waves I, III and V advance, while waves II and IV are corrective. Advancing waves have five subwaves (intermediate waves), while corrective waves have three (A B C). These waves in turn have subwaves. The chart shows that recent intermediate wave one of major wave IV was 1415-1292 and is labeled as wave A, intermediate wave 2 was 1292-1335 and is labeled as B, and intermediate wave C is now underway.
For fibonacci ratio projections, I used two methods. The first is using the preceding major wave III from 1075-1422. The second is using the fibonacci relationships from the developing intermediate A and B corrective waves of major wave IV to estimate the turning points. From this analysis, we see that 1289 has been breached, so it is thrown out. Next we see a bottom area of 1248, but this level does not line up with much chart resistance. Below that we see a cluster in the 1208-1212 area, which lines up near the beginning of minor wave c of intermediate wave three from 1202 to1378. This projection, in my view, is in play. Further below, we see a cluster in the 1136-1149 area, which may have a lower probability at this time. This level is below intermediate wave two of major wave III, but above the 1075 low.
The chart also shows that the 50 ma is now sloping down, but above the 200 ema by 35 points (1349-1314), and above the 200 ma by 64 points (1349-1285). However, SPX has slipped below the 200 ma by the close on Friday, June, 1, which is a bearish sign. We see slight divergences on the RSI and slow stochastic. Because: 1) the market is below the 200 ma, 2) weak divergence development, and 3) fibonacci ratio projections lining up with strong support levels in the 1202-1212 area; my conclusion is that further downside is probable. But we always need to remember to trade what we see, and not what we believe. It’s going to be interesting to see how the market unfolds in the coming days. Thanks for reading.
