{"id":127046,"date":"2018-05-21T08:15:14","date_gmt":"2018-05-21T12:15:14","guid":{"rendered":"http:\/\/countingpips.com\/?p=127046"},"modified":"2018-06-01T15:39:45","modified_gmt":"2018-06-01T15:39:45","slug":"fibonacci-and-elliot-wave-predict-breakout-highs","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/05\/fibonacci-and-elliot-wave-predict-breakout-highs\/","title":{"rendered":"Fibonacci and Elliot Wave Predict Breakout Highs"},"content":{"rendered":"
May 21, 2018<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/p>\n

There is nothing more exciting to us than reading the price action of the charts to see what will happen in the future.\u00a0 It becomes even more exciting when we find something that everyone else seems to have missed.\u00a0 Right now, traders need to pay attention to our research because we believe we have correctly identified a breakout pattern that is setting up in the US majors \u2013 and everyone seems to have missed it.<\/p>\n

Recently, our research team began a quest to properly identify the Elliot Wave structure of the US majors in relation to the recent price congestion after the February 2018 price collapse.\u00a0 You can\u00a0read our earlier research post to better understand our conclusions<\/a>.<\/p>\n

Our research shows that price could be setting up in a very unique extended Wave C pattern that would indicate the recent price correction in the markets could be a Wave D price rotation setting up a \u201cDiagonal Price Breakout\u201d pattern.<\/p>\n

How is this analysis important to all traders and investors?\u00a0 It is critical to understand that if the majority of market analysts believe this is a Wave 5 Top Setup, believing this is an ultimate top, when the reality is this is an extended Wave 3 (2.618 x Wave 1) and possibly the Wave 3-d formation, the long-term analysis is dramatically different. Instead of an \u201cultimate top\u201d setup, this analysis now becomes a \u201cprice correction in a longer-term upside trend with much greater upside potential to go\u201d.<\/p>\n

Let\u2019s get into the details of this analysis to better illustrate our thinking.<\/p>

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Without going into the details of how Elliot Wave theory works or the fractal price rotation balance that is essentially correlated to Fibonacci price theory, we want our readers to focus on this \u201cEnding Diagonal\u201d that is common near the end of wave 3 or \u201calways in wave 5 of a motive wave sequence\u201d.\u00a0 The source for this information and image below is from\u00a0World Cycles Institute<\/a>.<\/p>\n

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BULL MARKET MOTIVE ENDING DIAGONAL PATTERN<\/h4>\n

The Bull Market Motive Ending Diagonal pattern is the one that caught our attention as we attempted to better understand the current market price structure in the SPY chart.\u00a0 Pay very close attention to this pattern because we strongly believe most of the major analysts have completely missed the structure of price in relation to the upside potential within the US markets.\u00a0 As you are likely aware, our advanced predictive modeling systems have been warning of a price bottom and much higher price predictions over the past 30+ days.\u00a0 This prediction does not settle well with many traditional analysts because they seem fixated on the Wave 5 ultimate top analysis.\u00a0 We believe they are wrong and we will show you why \u2013 keep reading.<\/p>\n

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This type of Ending Diagonal is very common near the end point of a larger Wave 3 formation \u2013 often setting up a Wave 5.\u00a0 This type of Ending Diagonal is rarely seen as a wave C. (source :\u00a0http:\/\/elliottwavepredictions.com\/wave-notes\/<\/a>).<\/p>\n

Remember, we believe most of the best analysts on the planet have missed this setup and believe the early February price top is the \u201cultimate wave 5 peak\u201d setting up a much broader downside price move.\u00a0 Here is why we believe these analysis are wrong.<\/p>\n

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INCORRECT SPY DAILY CHART ANALYSIS EVERYONE IS USING<\/strong><\/h4>\n

This SPY Daily chart shows what most analysts would identify as a proper Elliot Wave count if they understood the Ending Diagonal pattern that was setting up.\u00a0 This is incorrect because the lower price rotation (iii and iv) are structurally invalid based on Fibonacci time\/price structure.\u00a0 We believe this is one reason why so many analysts have misinterpreted this current price pattern.<\/p>\n

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CORRECT SPY DAILY CHART ANALYSIS<\/strong><\/h4>\n

The correct analysis of this pattern is shown below.\u00a0 The difference, in our opinion, is that wave \u201ciii\u201d is still in the process of forming and will ultimately breakout to new highs before forming a short retracement and rocketing much higher to complete the ultimate wave 5.<\/p>\n

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Please take notice of the CYAN price line drawn by our researchers.\u00a0 Structurally, this price level must be reached in order to complete a wave \u201ciii\u201d.\u00a0 We believe once this \u201cnew price high\u201d level is reached and the market price retraces, the retracement level will likely be about 3% and stall near the upper BLUE wedge resistance line (near $278).\u00a0 The current price consolidation, over the past 4+ days, is nothing more than temporary resistance before the upside breakout to complete the \u201ciii-c\u201d price peak.<\/p>\n

Ultimately, as we suggested in our earlier research post\u00a0Elliott Wave Prediction for US Stocks, the final Elliot wave analysis of this rotation may take many more months to conclude with any degree of accuracy.<\/p>\n

The point of this article is that this Ending Diagonal pattern is common near the end of wave 3 and near the beginning of wave 5 \u2013 yes, we understand this point.\u00a0 Yet, our question remains \u201cis this the end of a 5-leg sub wave 3\u201d or \u201cthe end of a major 5 leg (ultimate peak)\u201d formation?\u00a0 Our belief is that the answer is this is the end of an \u201cextended wave C\u201d that will likely result in much higher price activity over the next few months\/years.<\/p>\n

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There is one key to understanding our analysis and our future expectations \u2013 recent price lows in the SPY must not be breached for our analysis to remain valid.\u00a0 These recent low-price levels are $254.67 & $252.92.\u00a0 If our analysis is incorrect, these low-price levels will be the first levels to be breached on a market price reversal.\u00a0 If our analysis is correct, price will never come near these levels and will continue to accelerate higher as a new wave 5 is created.\u00a0 If we are correct, there will be a lot of short sellers that get caught in this failed analysis and this move could be explosive and trigger that signature blow off\/capitulation topping spike in price that ends most bull markets.<\/p>\n

If you like our work, want our trade alerts, and want to support our efforts, please visit\u00a0www.TheTechnicalTraders.com<\/u><\/strong>\u00a0to learn how we can help you stay ahead of the markets.\u00a0 We live for this type of work, research and helping our members find profits in the markets.\u00a0 We believe our research is top-tier and we know we provide value to our loyal members.<\/p>\n

By TheTechnicalTraders.com<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com There is nothing more exciting to us than reading the price action of the charts to see what will happen in the future.\u00a0 It becomes even more exciting when we find something that everyone else seems to have missed.\u00a0 Right now, traders need to pay attention to our research because we believe we […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-127046","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/127046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=127046"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/127046\/revisions"}],"predecessor-version":[{"id":127047,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/127046\/revisions\/127047"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=127046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=127046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=127046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}