Now that we have a potential mid-term top in place, I want to provide an update to the multi-year triangle idea and offer an alternative path forward.
In Elliott Wave theory, triangle bounds are not formed by existing trend lines (like the one extending from $19,666). The bounds are formed by the A-C and B-D lines. Assuming the $10,074 high completed Wave D, then the aqua converging lines shown here are now the basis for our triangle:
The 200-week MA is edging higher, now standing around $5,800. It's possible the market is setting up for another (shallower) 200-week MA test, just like it did in August 2015.
According to EW guidelines:
So I like this idea for two reasons. Not only does the 70% retracement guideline line up perfectly with the 200-week MA, but such a correction would also suggest a Wave E contracting triangle. This would make the anticipated breakout (in late 2020 or early 2021) very easy to recognize.
In Elliott Wave theory, triangle bounds are not formed by existing trend lines (like the one extending from $19,666). The bounds are formed by the A-C and B-D lines. Assuming the $10,074 high completed Wave D, then the aqua converging lines shown here are now the basis for our triangle:
The 200-week MA is edging higher, now standing around $5,800. It's possible the market is setting up for another (shallower) 200-week MA test, just like it did in August 2015.
According to EW guidelines:
- Wave E is usually a zigzag family pattern or the same type of Triangle as the larger pattern.
- In a contracting triangle, Wave E normally retraces Wave D by about 70%.
So I like this idea for two reasons. Not only does the 70% retracement guideline line up perfectly with the 200-week MA, but such a correction would also suggest a Wave E contracting triangle. This would make the anticipated breakout (in late 2020 or early 2021) very easy to recognize.