Let me give you my analysis of Elliot wave on SPY just before he election in November 2018. Donald trump was in full swing with the anti-immigrant , anti media which according to him was the anti-people. He is definitely not toning his rhetoric down for anyone or anything. Anyhow, for the subject on hand. $SPY will hit the .Like the image above says “Target” is $255 area which is where SPY Index will end its journy on the down trend in the 4th wave ZIG ZAG pattern will end and the second leg of the ZIGZAG as to complete before it can ascend and go past the previous high of $ $293.94 set back in October 2018.
The Weekly RSI was getting some resistance on 4o RSI and that was a up day the 10/25/18 because of the typical fake out resistance on these crucial 40 and 60 levels .Fast forward one day and the SPY is falling again fast to go touch the bottom by the same time the election hits and after election it will start to rally again for the completion of 5th wave. After that it will be on the downtrend y the time the next presidential election in 2020. I made a trade on the 10/25 green day after a long struggle to find a method to trade up on. The wave theory works once you start identifying the patterns . Lets dive int o what it means. There are only a few patterns of correction when it comes to Elliot wave . They are ZIGZAG , Regular Flat ,Running Flat, Expanding Flat, and the triangles such as expanding diagonal, contracting diagonal as listed below.
Some points to take to heart:
#1 One important but not verified by me yet is the rule that time taken to form wave 3 must be equal to time taken to form the wave 1
#2 zigzag will have 5 wave and the triangles will not have 5 waves, that is one way to differentiate zigzag to triangles.
# 3 The correction happens in the opposite direction of the impulse move or the large trend move
Robert Pretcher the guy who extensively studied elliot waves and considered a guru got it wrong in 2009 saying that was the end of wave 5 , while we actually werein 1999 and it was going to be a bear market wrongfully numbered wave 3 as wave5 . When he said that in 2009 that it was the bear market from here on, he did incorrectly counted the end of wave 3 as wave5. I am guessing his 3 is our “1” his 4 is our 2 and his 5 is our 3 to make sense of the alternate count. Everyone is discrediting Elliott wave because he got the count wrong is not a mandate on Elliot Wave principle , the principle still holds good. Its just that the alternate counts do exits and they come true more often then not.