Elliott Wave In Intricate Detail On The DIA One Minute Chart

Did you know Elliott Wave can be applied to the intricacies of the One-Minute Charts?  I wanted to show an example that occurred just a few hours ago that details a possible Elliott Wave overlay that captured the full structure of the minuscule movements on the DIA (DIA) 1-min chart on February 9th.

DIA 1-min Chart - You’ll need to Zoom-in (click) for Detail:

If you’re asking, “What in the world are you showing us, Corey?” then let me explain as we go along.

You don’t have to apply Elliott to this detail, and doing so in real time on the one-minute chart is excruciatingly difficult in real-time so this is mainly an exercise in proper counting of Waves from an educational (example) standpoint, as this example and count properly utilizes all the principles of Elliott Wave as applied to a price chart example.  Impulse Waves subdivide into 5 waves (1,2,3,4,5) while Corrective Waves (against the Trend) subdivide into 3 Waves (A, B, C). If anything, just consider it an interesting or fun example.

Work your way wave-by-wave from the left of the chart to the right, taking into account the special “Fractal” Nature of Elliott Wave - that’s mainly what I’m highlighting to you.  Also, how Elliott Wave can compliment and enhance your current indicators or pattern recognition skills (as in bull flags, etc).

The large impulse down from Friday’s close into Monday’s open wound up being an “A” corrective wave down that subdivided into 5 waves, which told us to expect a “Zig Zag” Corrective pattern (one of which resembles a Bear Flag of sorts).  If it was a 3-wave ordeal, we would have been expecting a “Flat” most likely.

We rallied up into the confluence resistance zone from the 20 and 50 EMAs which set-up a Bear Flag (forget Elliott altogether and recognize the Bear Flag).  However, using Elliott, we could have termed this rally “Wave B” and then entered short to anticipate a 5-wave corrective “C” wave down which represented a “Measured Move” (or equal distance) of the prior down-wave (”Impulse” or Flag-pole).

Seeing that the “ABC” Zig-Zag completed, we should have been looking for some place to get long, or at least exit our short positions.

We had a 5-wave Fractal Rally up into resistance via the 50 EMA as we formed another “ABC” (three-wave) Corrective phase that ended just beneath the support of the 20 EMA.  Now is when Elliott Wave Analysis begins to pay off - and in fact, may be the only reason you should find Elliott Wave interesting…

The Third Wave

We expect Elliott 3rd Waves to be the place where the best opportunities are, and where we can make the most money the quickest.  In real time, you should have at least identified the ABC Zig-Zag (or Bear Flag) as the end of a corrective move and then maybe identified the last two waves as 1 and 2 (or that’s fine if you didn’t) but the “Line in the Sand” or “Point of Recognition” comes when we break the price highs of the prior swing high (in this case, Wave 2).

As if to add more confirmation, we saw the 20 and 50 EMAs “cross bullishly” which officially confirmed an uptrend in price.  Experienced Ellioticians were quick to identify this as “Wave 3.”

So wave 3 subdivided (’fractalized’) into its own 5-wave affair before reaching a peak and swinging down in a quick corrective phase to mark Wave 4.  Astute Elliotticians should have also been waiting to buy in (or hold) when Wave 4 completed to play for a retest of prior highs (at worst) or new intraday highs (at best) that marked Wave 5.

Wave 5 ended - as most do - with a Negative Momentum Divergence (you could have seen that with most indicators) and we began a second Corrective Phase that also formed a Zig-Zag (or Bear Flag, if you so desire).  I won’t describe that phase in detail but you can observe it for yourself.

Elliott is not “god” as I always say, but it can be a welcome addition or compliment to your existing understanding of price behavior.  Yes, it can be applied - if you have the reflexes of a rabbit - on the 1-minute chart but I recommend you use this as an example of how to apply Elliott to any time frame and combine it with other indicators and structural developments.

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