We have now reached the 61.8% Fibonacci retracement & medium moving averages at 1108-1110. Also note that we had a higher high Thursday which confirmed that objective wave 3 completed at the February 5 low and that wave 4 is underway. Furthermore, the move upwards has now exceeded the objective wave 2 high. In both Elliott and DeMark Objective wave work wave 4 is not allowed to exceed the end of wave 2.DeMark’s method to deal with this situation is to assume that wave 2 has not yet completed. That is, the entire move from the January 29 low until now is all part of wave 2. This type of pattern would be classified as an Expanded Flat (see January 27 posting). The other possibility is that the waves labeled 1-2-3 are really a complete a-b-c corrective pattern.
I have my own set of tools to use when conducting Elliott analysis and will begin to introduce them now. Today’s chart shows three of the tools: price fractals (denoted by the diamonds) and price CITs (denoted by the green circles) are the building blocks. CIT stands for Change In Trend. I then draw a trendline connecting the last two price fractal highs. When that trendline is broken it is a good (not absolute) indication that an Elliott Wave has completed.
So. What Elliott Wave has completed? More to follow in the next post.
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