A Quick Look at SPY Elliott Fractals on Friday

Sep 5, 2009: 1:16 PM CST

Not only was Friday’s trading day active and interesting, but price gave us a neat example of the “fractal” concept of the Elliott Wave principle.  Let’s take a look to see a good educational example of the concept played out on the ultra-short 1-minute timeframe:


(Click for full-size image)

Granted, this fractal move was part of a larger fractal starting from yesterday’s trading and probably finishing into the future, but from an educational standpoint, take a close look at how each impulse wave (likely of a larger 3rd wave) subdivides into its own impulse wave as taught by RN Elliott.

Refer to the full post “Wave Labeling and Fractals” for more information, along with the “Best Trades to Take” and of course “Basic Principles and Rules” in our new free education section of Afraid to Trade.

The main lesson is to recognize the powerful “third of third” or the ‘heart’ of the move which occurred just after 11:00am CST on this chart.  You don’t have to get the labels correct, but understand the concept – based on the momentum principle – that such a large impulse is likely to lead to higher prices yet to come after future pullbacks/retracements.

It’s my perspective that you dont’ have to be an Elliott purist, but just understand the concepts of momentum and divergences – and pullbacks to support for trade set-ups.

I couldn’t pass up showing this example though – it always fascinates me how the Wave principle which was described originally around the 1920s/1930s holds up still on a 1-min ETF chart intraday in late 2009.

For those deeply interested in the Wave Principle, visit Elliott Wave International (Robert Prechter’s site) for free and premium content and information.

Corey Rosenbloom, CMT

2 Comments

2 Responses to “A Quick Look at SPY Elliott Fractals on Friday”

  1. johnnywalker Says:

    Corey when you say likely of a 3rd wave up are you subscribing to the count that we are in the beginning of wave 3 of C upwards of the zig zag correction towards 1084 / 1132 ?

  2. johnnywalker Says:

    Corey when you say likely of a 3rd wave up are you subscribing to the count that we are in the beginning of wave 3 of C upwards of the zig zag correction towards 1084 / 1132 ?