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Wednesday, March 2, 2011

Elliott Wave Update ~ 2 March

The dollar's best count is what I show using futures.  I am looking for 76.11 where (c) = .618 (a).

In both time, price and waveform this count seems best and its long term bullish. That is appropriate as sentiment is very bearish.
As far as equities, again using the futures as a snapshot, we have equities trying to triangulate after a huge run-up. The degree of triangle, should it pan out, would be a Minor 4 triangle.  If not a triangle some other complex sideways development would occur (double three perhaps).

Simply put, if the triangle fails miserably here, we have our wave (iii) or [iii] down.

So we have somewhat of a balance of forces at this moment in time with a bearish slant. If we are to see a nasty wave three down event, the forces of selling must win out.

The thing about a triangle at this stage of the game is that as it traces sideways, sentiment tends to get bearish yet prices maintain. Thus we get a surprising bullish thrust after "[e]". If sentiment maintains bullishness as it traces sideways, you can get a failed or a weak thrust up and maybe not even a new high. A failure can be the result of  widespread recognition of a triangle which in fact causes its failure as traders all anticipate a breakout and recognize the price pattern. I am certainly not saying thats the case here but it could be soon.

One strong guideline of a triangle that helps us identify the potential, particularly of this size, is that one leg should be a complex wave. Usually the C and if not the C, it would be the D.  Hence its important to be on the lookout for a complex wave of which we have not had yet.

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