Thursday, October 15, 2009

SPX - 10/15 AM UPDATE




Fig 4-6: Wave 5 NOT Extended


EDIT (11:50 AM): I added an additional chart below highlighting a wave 5 extension based on the current structure. I relabeled the counts for this example. I will post another chart using the original counts with a wave 5 extension later.


Perhaps this is one way of interpreting the waves?

I have attached a figure from EWP (Pg 137 Fig 4-6) highlighting a common wave ratio between wave 1 and 5. According to EWP, unless wave 1 is extended, wave 4 often times divides the impulse into the Golden Section (paraphrased from EWP Pg 137).

There are two relationships that stand out at the moment.

1. A comparison of figure 4-6 to the ratio highlighted in red on my chart shows a major similarity. Though wave 3 is shorter than 1 based on this count, it is not the shortest, so EW rules are not violated.

2. Wave 5 is .618 x wave 1.

On the other hand, if wave 5 extends and wave 1 does not, we can expect to see a relationship as highlighted by figure 4-7 from EWP (Pg 137) below:


Wave 5 Extension


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