Are We In A Triangle?

One of the hallmarks of a triangle is the constant whipsaw we see as the market moves in a-b-c fashion through 5 various segments of the triangle labeled [a][b][c][d][e].  One of the other hallmarks of a triangle is that at least one of the 5 segments takes shape as a complex structure, and often we see two of those complex segments.   Furthermore, the [d] wave is often a complex structure.

If we are indeed in a triangle, this is a b-wave triangle, and I have used the white lettering to label the various segments of this triangle. We can also see that the [b] wave of this potential triangle was a complex structure.   The question now is if the [d] wave will also be a complex structure.

With the market holding resistance for the [c] wave yesterday afternoon, we began this decline into the low we struck near the end of the day.  At that time, I sent out an alert noting that I would reasonably expect a bounce to be seen, which would be a b-wave bounce.  Early this morning, I sent out another alert around 5:30AM outlining the resistance for the expected bounce (the chart is attached below), and noting:

“It looks like we got that bounce in the afterhours.  So, here is our resistance for today.  Through this resistance opens the door to the yellow (b) wave on the charts.”

It is quite clear that the resistance held, and we saw a 5-wave decline.   So, I am now viewing that a bigger a-wave within the potential [d] wave of the triangle. You can see the a-wave support box I noted on the ES chart below.  

As long as the current bounce retains a corrective structure, then I will view it as a b-wave bounce, and expect a continuation decline in the c-wave of the [d] wave.

But, of course, since we are dealing with corrective 3-wave structures, there are parameters. First, we really should remain below today’s high.   However, if we break out over today’s high, then I will have to assume the yellow b-wave is taking shape in a more complex w-x-y fashion, and the resistance for that potential move is 6049-6065SPX.  And, of course, a move through that resistance points us back up to the 6130-50SPX region in a further extension of wave V or alt III in blue.

Yet, again, as long as we remain below today’s high, then it is reasonable to continue to look lower for the c-wave of the [d] wave.  

The next parameter is that the [d] wave should bottom over the low of the [b] wave.  A break-down below the [b] wave would suggest we are dropping down to the support box below in a more direct fashion, and following the red wave count.  

So, for now, our main point to watch is today’s rally high, as that is also where the .764 retracement of the a-wave would reside, and I would not expect us to break out over that level if the market had an immediate intention of dropping in a c-wave for the [d] wave (or something more immediately bearish as per the red count).  However, if we break out over that level, then we will likely contend with the 6049-6065SPX resistance next.

Lastly, it is not really suggested that most of you trade these moves, as they are quite variable and unreliable.  In fact, I cannot even say for certain that we are indeed within a triangle, but the path thus far seems to weigh towards the triangle structure.  For now, I am going to continue to follow the triangle potential path, but just recognize that there could be certain further whipsaw moves that I cannot foresee within these 3-wave variable structures.