Flat increasingly likely - channel guidelines show the way
One of the best ways to simplify the Elliott wave method is by using the channel guidelines. Here we can see the corrective channel on the initial pull back from its top has been broken significantly to the downside. This indicates that it is an impulse wave, rather than any corrective pattern. In other words, the advance at this degree is complete and it's now in a more significant decline, again at this degree.
Using the first 3 pivots - the top of the advance, the first low, and the next pivot high gives the corrective channel. Now that it's broken in this way it becomes a base channel for the decline. We can see it contained a second attempt to push higher before it made the impulsive move to the downside, then held a retest and continued its decline. This gives us the indication that a more significant decline is in progress.
In this case, the potential is for this to be the first of 5 down to complete the 4th wave flat pattern at the larger degree advance. That means it would retrace to make a 2nd wave advance before continuing the decline - in other words, if that played out, it would give us the first 3 pivots to repeat the above channel guideline at a larger degree of pattern - the local top to the end of the first, and finally the end of the 2nd wave advance. Then we could expect the same impulsive decline to break that channel to make the 3rd wave at one higher degree.
As always though, these are guidelines - never guarantees. Someone could always come in and buy up all the sell orders, sparking a return to the upside. Remember, only buyers and sellers determine whether it goes up or down.
Using the first 3 pivots - the top of the advance, the first low, and the next pivot high gives the corrective channel. Now that it's broken in this way it becomes a base channel for the decline. We can see it contained a second attempt to push higher before it made the impulsive move to the downside, then held a retest and continued its decline. This gives us the indication that a more significant decline is in progress.
In this case, the potential is for this to be the first of 5 down to complete the 4th wave flat pattern at the larger degree advance. That means it would retrace to make a 2nd wave advance before continuing the decline - in other words, if that played out, it would give us the first 3 pivots to repeat the above channel guideline at a larger degree of pattern - the local top to the end of the first, and finally the end of the 2nd wave advance. Then we could expect the same impulsive decline to break that channel to make the 3rd wave at one higher degree.
As always though, these are guidelines - never guarantees. Someone could always come in and buy up all the sell orders, sparking a return to the upside. Remember, only buyers and sellers determine whether it goes up or down.
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