Above is the 10 minute chart of ES. I’m seeing an expanding ending diagonal (very rare). We’re looking for a top. I have a measured top at 2442. These patterns don’t do a throwover and sometimes don’t quite make it to the top trendline for the fifth wave, so somewhere in the 2442-3 area looks like it might indeed be the target.
However, based on what USDCAD just did (I got out frustrated two hours before the move!) and how far currencies still have to go, I’m leaning towards Monday morning for the turn. We’ll see what happens.
This is a really ugly market! Be careful if you’re in currencies particularly.
Market Update for Friday, June 9, 2017
Market Update for June 9, 2017
Market Update for Thursday, June 8, 2017
Market Update for June 8, 2017
Market Update for Wednesday, June 7, 2017
Market Update for June 7, 2017
Market Update for Tuesday, June 6, 2017
Market Update for June 6, 2017
Update: Monday, June 5, 12:10 pm EST
Above is the 15 minute chart of ES showing this final wave up. I’ve taken a different approach to its labelling this morning, by treating it as five waves. The labelling suggests that we’re in the final small 5th wave and that we’ve finished wave 1, 2, and are in the middle of wave 3 of 5 with a potential target of 2443.50 or so. After that, a small 4th and 5th.
As I stated on the weekend, USD currency pairs should reach their targets and the US market reaches it’s target. I still expect them to all turn in tandem.
“To begin with, diagonal triangles are very rare.” Robert Prechter, The Elliott Wave Theorist, August 5, 2009
Perhaps not as rare as he made out. Certainly not in the past year or so. Ending diagonals have been appearing with some frequency. We have a potential one at the hourly chart level and below, I’m showing one at the 5 minute level.
This weekend, the ending diagonal and larger structure has reached up to develop “a sharper point.” Ending diagonals are described as having an ending wave with no defined target as a top. I’m trying to determine whether there actually is a fibonacci guideline to determine a top but so far, do not have enough data to say so definitively. All I can do is provide the next obvious fib ratio and see whether we get a turn at that point.
But while the spiked top sharpens, there’s more to it than just the end of the ending diagonal at play here. There are larger forces at work and that’s what this weekend’s report is all about. A little more patience in needed, imho.
Above is the 5 minute chart of ES. Based upon the current positions of the USD currency pairs (close to their targets but not there yet), I think we have a few more days of levitation before we hit the fourth wave. All the USD currency pairs and the US dollar (of course) should turn at the same time. The bottom line is that we’re waiting for the dollar (you’ll find my long term projection for the dollar in the free blog post this weekend).
On a small scale (above), I’m expecting this ending diagonal to expand down to the lower trendline. Usually the third wave is very complex and the first tough of the trendline was what I had originally earmarked at the top of wave 3. I have since moved the digit 3 one top to the right and expecting, as a result, a much deeper fourth wave to perhaps somewhere around the level currency marked with a ‘4.’
I would expect Sunday to be slightly bearish and perhaps Monday through Tuesday to be bullish to complete this final leg up. But, in order for the larger turn down to occur, currency pairs must reach their targets outlined in today’s video and (in come cases) in the weekend longer term charts below.
A Higher Tide Floats All Boats
Last week, I summarized a very important aspect of this current top. I included the information in the free blog, and ended up getting a comment or two at the end of the week that were very sarcastic regarding the my target. They completely missed my point about the DOW and NYSE both having to reach new highs.
I have always maintained that once one index tops, they all have to (so that they stay in sync). I’ve not seen it fail yet.
But it’s more than this that keeps the SP500 from not topping until the others top. The next wave down will have to start with five waves. If you look at the charts of the DOW and NYSE from the previous week, it was very obvious that they were in fourth waves. The waves down were in threes; in fact, they wave structure was so “messy” that even an bad analyst would have to agree that there was no way they weren’t going to top before heading down in a larger fourth wave.
So, the key, as I preach over and over again, is to watch the entire market, certainly indices that are related to each other. Both the SPX and DOW are subsets of the NYSE. They move more or less together. The wave structures have to be correct in order for the next wave down to start.
This week, we completed this important step. We have one more to go: a major turn of just about everything associated with the US dollar.
All the Same Market
I’ve been mentioning for months now that the entire market is moving as one entity, the “all the same market” scenario, a phrase that Robert Prechter coined many years ago, when he projected the upcoming crash (although he and his group don’t seem to be paying much attention to it now …).
We’re starting to deleverage the enormous debt around the world. Central banks are losing the control they had and we’re slowly sinking into deflation world-wide, with Europe in the lead.
The US dollar is fully in charge of both the equities and currencies markets. They’re all moving in tandem, as I’ve been saying since September of 2015. For a short while, currencies were moving contra to the US market, but for the past several months or so, they’ve been moving together. The EURUSD is very closely aligned and will likely trace out a fourth wave as the SPX traces out one, too.
All the currency pairs will turn at the same time as the US indices for this fourth wave. Even Andy Pancholi has alluded to this, but he didn’t get the date correct. It is still to come. This is the final hurdle.
Rule of Alternation
The Rule of Alternation should play a part in the structure of wave 4. It affects waves 2 and 4 and states that if wave 2 is sharp and deep, wave 4 will be shallow and sideways, and vice versa. Wave 2 was a sideways wave and so I expect a sharp, deep wave 4. The timeframe may be a bit shorter than wave 2, but I’ve kept it the same in my projection, the dates of which you can find in the post from two weeks ago.
Wave 5 is typically 1.618 X the length of 1, so I’ve given it two extra weeks (I’m projecting 12 weeks). However, this is not a motive set of waves, so wave 5 may be shorter than this (it typically is in a non-motive 5th wave). It should not be extended, as wave 3 was extended and it would be extremely rare to have both extend. We may end up with an ending diagonal, since this is a final top in a corrective pattern. Ending diagonals appear 1) in motive 5th waves and 2) at the end of a C wave.
If we have a normal wave 5 is SPX (and a normal fourth wave, dropping to about 2250), then I project the final top at around SPX 2500.
Opportunities this Week
There are opportunities this week:
- ES/SPX (a big opportunity short, the wave down should last weeks)
- All the US Currency pairs are turning (almost there – everything will turn at once)
Here’s the latest daily chart of ES (emini futures)
Above is the daily chart of ES (click to enlarge, as with any of my charts). The count has not changed appreciably. What appears to be a third zigzag of the third wave (you can only have three patterns within a corrective wave—this third pattern starts at blue X on the chart) has continued slightly higher and continues to build a potential very large expanded flat at the top of the circle red third wave. The top of this last wave has now formed what looks like an ending diagonal, and that is also very close to a top.
Last week, as I mentioned above, I warned that the DOW and NYSE still had to top. That step was completed this week. Now we’re waiting for the USD currency pairs to hit their targets. Everything is going to turn at the same time. It takes time to turn around an ocean liner.
Summary: We’re completing the third wave in ES with a possible expanded flat. Look* for a turn down this coming week.
After completing the larger fourth wave, we’ll have one more wave to go, which could be an ending diagonal as a fifth wave. The long awaited bear market is getting closer.
* When I use the words “look for,” it’s the same as “watch for,” as in “Watch for a tornado in the western plains area this afternoon. The conditions are right.” It doesn’t mean we’re going to have a tornado, but you should be on the alert, just in case we do. It applies to my call for this week, as well. The conditions are just about right for a turn. However, as I’ve stated above, the USD currencies must reach their targets as a pre-condition of the turn.
Here’s the latest 60 MIN chart of ES (emini futures):
Above is the 60 minute chart of ES (click to enlarge). Please watch the video to get the full story on what’s happening short term.
I’ve pointed out the ending diagonal on the 5 minute chart. However, there’s potentially a larger one on the 60 minute chart. So, the question arises as to whether this larger ending diagonal could expand, similar to what I’ve outlined on the 5 minute chart above. It could, and this would be a much larger move, of course. I don’t have the answer. We’ll have to wait and see.
At the same time, this structure on the 60 minute chart may not be an ending diagonal at all. We already have, and have had for some time, a potential flat forming. More specifically, this is a potential expanded flat. That means that when it’s ready, we could see a very sharp and dramatic turn down. We may not have any warning in the US market, but we should in the currency pairs—that’s why it’s so important to watch them and why I’m alluded to there position several times here and in the free blog.
Andy’s turn date for SPX is Saturday (next weekend) but there’s a EURUSD turn date for June 7/8 and since everything is likely going to turn together, my attention is on the earlier date.
The Projected Timeline for a Top is in the Forum now (click here)
Andy Pancholi Turn Dates (June, 2017)
- SP500: June Sa10, Th22*
- EURUSD: Jun W7/Th8, M12, Th22*
* denotes major
New Free Blog Post: Elliott Wave: Probable Cause
The CHART SHOW signup is live for Wednesday, June 1 AT 1pm EST. You can sign up now in the usual spot: webinars.
Here’s a video overview of the market for Monday, June 5, 2017
Market Report for June 5, 2017
Charts Going into Monday
Above is the 2 hour chart of SP500. As with ES, we’re at the top of the third wave. As I said last weekend, this final wave up is a zigzag and the C wave of this zigzag should play out in 5 waves—it has. As per my prognosis for ES, this structure needs a turn down and then another turn up. The fifth wave of an ending diagonal must be in three waves and so far, it looks like a “one.” So we need a small bc to end it off.
We have an Andy Pancholi projected turn date for the EURUSD on Tuesday/Wednesday, so perhaps both the EURUSD and the SP500 will turn on that date.
The rest is in the video, and virtually the same as my prognosis for ES (above).
Above is the daily chart of the US Dollar. No change here in terms of my long term prediction—we’re heading down to the 91.88 low.
On a near term basis, we’re now quite obviously in the third wave of this downward thrust. We got a small wave 4 retrace (I was expecting a little bit deeper, but I think it’s done). Now, I’m expecting a continuation down to about 95.87 to complete the third wave. Then we should get a larger 4th wave turn up.
Note that we’re about half-way down to our target now and we’ve travelled for about four months of the projected eight month wave to the final target (~91.88). At this rate we’ll hit our target in September, as previously predicted. EURUSD is following a similar path in the opposite direction.
The movement of the dollar determines the movement of just about everything else these days. The longer term target for the entire wave down is 91.88.
Above is the daily chart of EURUSD. The bigger picture is that we’re headed up towards a target of 1.16 (and change) before we get a really major turn down (a fifth wave).
On a short term basis, we’ve completed 5 waves up in the most recent wave. However, the subwaves don’t yet look complete and we may head up a little higher to the 1.13 area before turning down in either a larger fourth wave. That would put the US indices, EURUSD and US dollar in sync, as I’ve been predicting for the past year and a half. The larger trend remains up.
More in the video, of course.
Above is the daily chart of USDCAD. We’ve continued down in what so far is an ABC correction. I get more specific in the video. My preference is still for a double top, or a retrace the the 62% retracement level (horizontal line on the chart at about 1.3838). I expect it will take place as ES/SPX heads down in the fourth wave.
On a short term basis, it looks like we’ve reached the downside target (1.33836), which is the point where wave C is 1.618 X wave A. We then bounced to the previous 4th wave area. I’m expecting a double bottom here. If by chance we drop to a new low, that would mean we’re completed five waves down. At that point, we would need a second wave retrace to 62% of the full wave down. However, my preference is the for the double bottom.
The high (whether the current one remains in place or not) should mark the turn into to a multi-month wave down to 1.19. I would expect the turn to coincide with that of AUDUSD, as they usually move together. It may also coincide with the end of wave three in the US market.
Above is the weekly chart of the AUDUSD. I’ve changed the short-term prediction for this currency pair.
I got called out on this chart by one of my subscribers and on second look, he was right to question it. The ultimate outcome is the same, but it doesn’t make sense for the current pattern to be a bullish triangle.
I’ve re-labelled it as an A wave up with a very complicated B wave that may drop to either .71452 (the previous wave B low as market on the chart) or .708 (an extension fib measurement of the very small ‘a’ subwave (not shown—it’s too small) of the blue AB wave on the chart). This also makes sense as I would expect a larger drop when the US market movers into the 4th wave down.
Above is the daily chart of GBPUSD. I’ve been expecting a fourth wave for the past two weeks or so and it’s finally taken hold. The longer term direction is up, but this correction may be a larger one still.
GBPUSD has seemed to be moving independently of everything else but it appears to be molding into fourth wave in conjunction with other pairs. Expect more downside; however, the larger move is to the upside. I expect the move up to continue to at least 1.34457 (a previous smaller 4th wave).
More information on the short term prognosis in the video.
Above is the 7 day chart of USDJPY. We continue to flirt with a top here. The upside target I have is at least 114.5, and could go as high as 118.4. That’s because the wave down is in 3 waves. More on this in the video.
Once we hit the upside target, I expect a turn down to about 98.75.
Above is the daily chart of gold. I’ve been saying lately that I don’t like what this asset is doing. I’m now expecting a new high. It can certainly spike to a new high, but the waves up will still be in 3’s, so the longer term projection is for another wave down. Silver may only retrace to 62% and if it does, this would help us time a top in gold.
Logic would project a move up as the US indices move down it the projected fourth wave.
So be on guard for a further move up, but I still believe the larger trend to still be down.
When we reach our target, we’ll turn back up. The final upside target is around 1585.
Above is the daily chart of WTI oil. The direction continues to be down. Not much more to say here.
The longer-term target is around 32.00.
Finally, we should get an E wave up to the upper trendline to complete the larger pattern. That would be followed by a final 5th wave down to a new all time low.