After consolidating for a couple of days at my initial target of 45.57, the QQQQ has continued to climb higher. This has two significant impacts that I have described below as I explain the chart updates.
Before I get into that, I do want to simply summarize the below so that if you are Elliott Wave challenged, you do not have to read on. Basically, I very strongly believe that this move up is coming to an end and I still think the next support level of the down move is near 40.50.
Chart 1(hourly):
The hourly chart shows that wave 5 continued to climb up, contrary to what I had originally suspected. After reaching the top of the channel (black diagonal line), QQQQ moved along the channel, setting a price high of 46.64 (again). Now if you refer back to my earlier posts, you will notice that the second most likely target I had set for QQQQ was exactly 46.64 (as reflected in the daily chart below, chart 2). This fact, coupled with the major divergence I am seeing in the oscillator and the fact that volumes are declining further, strongly leads me to believe that wave 5 is more than likely over.
The only alternative is that wave could extend and continue upwards. I find this unlikely because of 2 reasons. Firstly, the 5th wave extended in the previous motive wave up (wave A green). Thus it is likely that the same will not happen again.
The second reason is explained below as it needs us to look at the daily chart.
Chart 2 (daily):
The second reason why I believe that wave 5 will not extend is because that would put wave C (green) above the previous top. This would imply that a running expanding triangle is developing as the correction and right now we are in wave B (blue).
Now I realize that such a thing is a possible. But it is very unlikely in this particular instance because wave A/1 (blue) was 5 waves down. This means that the most likely wave pattern that will develop is a Zig Zag or a triangle of some sort that is part of wave 1 down of a wave level higher than the blue waves. Now we can safely assume that this is not a zig zag because wave B/2 retraced all the way to market high, so the only alternative is the triangle option, and running expanding triangles are VERY rare, especially those with a 5-3-x-x-x pattern.
One could argue that this is a flat correction, but again, unlikely because wave A (blue) was 5 waves down, and flats usually have a 3-3-5 pattern.
I hope I have not lost you, and if I have, once again to summarize, I believe the target for QQQQ is near 40.50.
As a further update, I will try including time studies on future charts to have an idea of when these moves should be completed.
-Wown
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