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Friday, May 22, 2020

Elliott Wave Update ~ 22 May 2020

Primary count is that the triple zigzag (2) is complete or nearly complete.  The alternate pattern is that wave (2) has further to run, likely toward the 78.6% Fibonacci retrace marker.

The 61.8% Fib marker in the Wilshire 5000 (29,780) is apparently important to the market. After reaching it in [a] of Z (rejected), and then again in (b) of [c] of X (rejected again), a big open gap this past Monday placed it again above the marker and the rest of the week saw sideways trading that maintained above the Fib marker except for Tuesday's close where it slipped beneath. But Wednesday saw another good-sized gap higher again above the 61.8 Fib line and prices have maintained it the rest of the week.

Today it tested the Fib line numerous times intraday with elevated down pressure. But it held and the market climbed higher.  The Fib marker seems important one way or the other.

Remember, we have 7 waves up overall which is corrective by Elliott Wave guidelines.  Wave-wise its probably best that its counted as a double zigzag, but in the end, its a moot point if (2) is nearly over.
Two variations of squiggles for the count. Descending imperfect triangle for wave (iv).
A closer look at the intraday struggles and testing the Fib marker with elevated down pressure.
And of course the squiggle count in which (2) is over and we just haven't realized it yet. There are technically 5 waves down from the peak although they are imperfect and overlap.
The alternate count(s) for wave (2) supposes that instead of counting a triple zigzag (or even double zigzag) such as I have, wave (2) is a more simpler A-B-C pattern (single 5-3-5 wave zigzag). This implies that wave C will run higher in price and longer in time because it should have a minimum decent relationship with time and price of A and B.

We call this "the right look" in wave counting.  The key to this count is we are trying to confirm wave [i] of C peak (may have already happened) and confirm wave [ii] of C low (may have already happened also).
The two squiggle variations. This variation supposes a deeper pullback for [ii]. However the market was very reluctant to go beneath the .618 Fib marker this week.
So that brings us to the most interesting variation of the A-B-C...that supposes that this week's trading was basically a high sideways Wave [ii]. The refusal to go back under the 61.8% Fib marker is very interesting in this regard.

You know what else is interesting? The Wilshire curiously did not print an open gap up from Monday as the other indexes did (DJIA, SPX, etc.).  This suggests that there is nothing to "close" by a deeper retrace of [ii]. Is this a silent signal (conspiracy theory alert) telling market participants (trading algorithms) that the Monday gap up is not a retrace target? I'll admit as soon as I saw the print Monday morning that's exactly what I thought! And lo and behold, prices have stayed out of that long Monday up candle all week.

But it did print a gap up on Wednesday and that was a trading target to close. Curious how that works...
I'll be back later I'm sure with more. I'll add anything new tonight down here.

UPDATE: 6 PM EST:
Gold may be poised to break higher finally.

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