Invisible Trend-line Support & Elliottwave Triangle
By Bennett Tindle December 10th, 2018
In the near-term we anticipate a period of consolidation which should result in a move to new all time highs. Most analysts have been bearish, citing a potential head and shoulders reversal pattern. Meanwhile, they ignored the larger/higher degree trend, which, from a traditional technical analysis standpoint, shows an inverted head and shoulders reversal, indicative of a move to new highs. Once this initial 5-wave, post-triangle, motive-impulsive advance comes to completion, we’ll be watching for any corrective move to support our more bullish outlook and stance. In the event we see impulsive price action to the downside following this 5 wave move, we’ll refer to our contracting variety triangle count, an interpretation that we’ve been tracking as our primary count for well over a year.
You might be asking yourself, what good is the wave principle if there are multiple counts and possibilities? The answer is simple… context! Trading is all about having a plan(s)! In fact, our company motto is ‘Plan your trade, Trade your plan’. When plan A fails, see plan B…. In the world of the wave principle, your plan ‘B’ is an alternate count or interpretation. It gives you context in the event your initial plan fails, as opposed to leaving your scrambling to figure out what could happen next. In fact, most forms of technical analysis don’t even leave room for a Plan B…. but the wave principle does! We view this as a benefit, and when both interpretations support the same movement, your level of conviction increases, as does the statistical probability of the forecast movement. A perfect example of this would be our most recent breakout to new highs… Not only did our bullish interpretation support it, but so did our contracting variety triangle count! If you haven’t figured it out yet, we are major proponents of the wave principle here at TradingAnalysis.com. If you are looking to learn more about the wave principle, consider checking out our Elliott Wave Mastery course!