by Avi Gilburt, ElliottWaveTrader.net
Thursday November 14th 2013
Today we saw a continuation of the rally, which was expected as we continue to fill out what should be the 5th and final wave off the October low. Using fib pinball, the standard target for a top of wave 5 is generally the 2.00 extension, which would be 1801 in this case. However, taking the subwave structure of this 5th wave into consideration, it is possible that price is able to extend a little further past that level before completing the pattern. Therefore, the target range for a top is going to be between 1801 - 1824, with a sweet spot around 1805 - 1810.
Zooming in to the subwave structure of this 5th wave, price should currently be in wave (v) of iii of 5. That would suggest follow through from here up to roughly 1797.50 before pulling back in wave iv of 5 to 1785.50. Assuming that this path plays out, wave v of 5 would take price to 1809.50 to complete the structure at the standard 1.764 extension that is common with a substructure such as this one. This count is illustrated in blue on my chart.
As an alternative, we cannot dismiss the potential for an ending diagonal in this 5th wave, despite the standard impulsive structure fitting quite well so far. Under this scenario, wave iv of 5 would retrace much deeper, to roughly 1773.50 - 1766, which is where the rising trendline resides that defines the lower bound of this minor trend channel. Assuming that support holds, the wave v of 5 in the ED would likely target the larger 2.00 extension fib at 1801. This count is illustrated in red on my chart.
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