A Lesson In Triangles
By
Avi Gilburt
One of the lessons I have learned through the years is that a triangle is not truly a triangle until it actually completes. There are a number of ways one can count a corrective structure, and a triangle is just one way. So, while this is looking like we are trying to form a triangle at this time, it can always invalidate and morph into something else. In fact, I have outlined over the weekend how this can still take us lower in a more direct fashion.
Another one of the lessons I have learned about triangles is that, while we may choose to consider them complete when we have the minimum number of waves in place, it is rare to find a triangle that just provides the minimum number of waves. Therefore, many times, a triangle is called as being completed before it really does.
To that end, I can now claim there are enough waves to consider the triangle complete. But, to be honest, the e-wave would really be relatively small, which has placed a big question mark in my mind that a triangle has completed. Moreover, experience has taught me that this is rarely how a triangle actually completes. In fact, I am even questioning whether the d-wave itself has completed, which you can see on the 5-minute SPX chart.
So, if the market moves lower from here, then my primary count has us in the (c) wave of the d-wave, which will be appropriate for as long as we hold over the low of the b-wave at 7294SPX. However, if the market rallies from this point, then it means the d-wave was completed last week, and we are already in the e-wave of the triangle.
And, of course, should the market break down below 7294SPX, then I would have to assume we are already declining in an ending diagonal for the (c) wave down and the triangle count has likely invalidated.
The biggest take away from overlapping structures like triangles is that they always come with some form of complexity, which is exactly what we seem to be dealing with of late.
And, overall, my expectation remains for lower levels to be seen. The exact path is still very much in question.
