| Author | Source |
|---|---|
| u/head4headsup |
GME Hourly - Wave (ii) on deck; wave (i) nearly complete
Obligatory Introā¦Ā This is an analysis of GME stock price movements using Elliott Wave Theory. To learn the basics of Elliott Wave (EW), please visitĀ r/ElliottWaveTrading. I also recommend the bookĀ Elliott Wave PrincipleĀ by Frost & Prechter (link in the sub above). While Elliott Wave is great at predicting price targets in the most probable coming scenarios, it does not make timing projections. Wave development can occur over long periods of time or in just a few candles of the chart (as witnessed in JAN and MAR for GME). EW can be useful for the investor in many ways, especially if seeking to buy, and looking for the next most probable dip (discount) in the share price; it can provide clarity in moments of chaos to aid the observer in understanding likely next moves within a trend or countertrend, avoiding blindness/guessing (among many other uses). It may be easier to avoid paper hands if the dip you encounter was expected, and holds above the lower target for that move.
Todayās Update
REMEMBER THISā¦ I AM NOT SAYING SELL, I AM NOT SAYING BUY. I AM NOT SAYING DAY-TRADE THIS. I am simply offering my opinion of market movements. Go back up there ^ and read the Obligatory Intro. Please. Then come back down here.
A Tribe Called Quest -
Primary bullish count continued to play out as wave (5) of (i) developed in textbook fashion after GME gapped down at open to complete wave (4). I projected (4) to complete at $226.29. GME struck $227.08 before turning up in (5). Iāll take it. If Elliott Wave is getting within 79 cents of a target, I challenge you to find a more accurate system.
Recall that when upcoming waves are projected from the larger degree 1-2, they are guideposts of what to expect, but the trump card is the subwaves of the new impulse that is unfolding. When waves (1) and (2) completed, we had projections for (3), (4) and (5)ā¦ BUT it is the subwaves of (3) that truly determine the calculated projections of where (3) [and then naturally (4) and (5) also depending on their subwaves] will complete. We also must remember to extend the targets when a third waveās subwaves start extending.
GME Micro (5-minute candles) - Waves i, ii and iii of (5) complete today
That said, we saw Waves (3) extend to the 1.618 yesterday, followed by (4). It looked like (4) needed more downside, which we got this morning. From that wave degree alone we would expect wave (5) to complete higher than originally projected from (1)/(2). So today, waves i, ii and iii of (5) did their thang, with wave iii nearly reaching the textbook 1.382 extension of (1) from (2). Wave iv of (5) should reach down to the .764 at $250.15 tomorrow, but it may be done already. Either way, I expect wave v of (5) to complete around the 1.618 fib target of i from ii at $270.10, and findsĀ ConfluenceĀ with (i) targeting the 2.0 extension of (1) from (2) at $269.47.
The subwaves of wave iii set out yesterday with 1, 2 and 3 completing nicelyā¦ notably wave 3 nailing the 1.0 extension of i and clearing it by $0.25 (recall yesterday I said wave 3 may really haul assā¦ not wrong ;). I was unsure if the minor pullback to end the day yesterday was enough for wave4 of (3), but it turns out that small bump/dip to end the day was the perfect setup forā¦
Upside potentials?
After that?Ā - I noted yesterday (and caught plenty of flack for being a shill) when I noted that textbook Elliott Wave theory calls for a wave 2 retrace of .618 of wave 1. In this case we are dealing with a larger degree wave 1ā¦ specifically āWave (i)ā that started nearly three weeks ago when we bottomed at $136.59. We have seen four complete waves (and the fifth about to finish) in that time. This āWave (ii)ā is of the same degree as that big Wave (i). It should retrace to the standard .618 target of $187.59, but may go shallow, only down to the .500 retrace fib at $203.35. This should develop as a three-wave structure, A-B-C. A and B should subdivide as three wave structures (a-b-c) and Wave C is typically a five-wave completion of the corrective actionā¦ a culmination of the countertrend if you will. As noted above, we can project the downside targets from this larger degree, but the subwaves as the ABC develops will trump the larger degree. Ideally, the targets of both find confluence near each other.
Holā up -
Recapping the downside, if wave (5)/(i) tops around $270 as expected, then wave (ii) should target $187-$203. This is not a scare tactic. Just a reminder that markets go up and down, and the longer term ups are accompanied by potentially longer term downs. It is all part of the yin yang, give take, coiling needed to spring up to even loftier heights. Wave II took FOREVER to complete. I was updating and relabeling for weeks as wave violations occurred or we broke below crucial support. If we can stomach the whipsaw of a major wave like Wave II, we can certainly handle this little blip of a lesser degree wave like Wave (ii) of III.
This is again just one theory of technical analysis (and the most accurate Iāve seen). It is prudent to expect this to play out, even if we all hope for this to get thrown out the window once we moon and circuit breakers start trippinā etc. Until moon, I am left with leveraging my understanding of human psychology en masse and how it is reflected in price in the markets. Expect itā¦ plan on itā¦ Elliott Wave said it may be possibleā¦. Diamond Hands are earned, not given!
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Big Picture: How Did We Get Here?
I believe Major Waves (I) and (II) are in place (January High and February Low, respectively)
I believe we are in major wave (III), with Major waves I and II in place (March high and April low, respectively)
I believe we are in wave III, with waves (i) underway
I believe we are in wave iv of (5) of (i). v of (5) completes (i)
Longer Term Targets Still Intact (not invalidated) -
(iii) of III - at the 1.000 extension of I from II = $441.00
III of (III) - at the 1.000 extension of (I) from (II) = $520.12
(III) - at the 1.764 extension of same degree waves (I) from (II) = $850.23
All of these subject to recalculation if subwaves extend to higher fibs
I realize the MOASS could just blow these labels up and force me to use the double parenthesis-bold-capital Roman numeralĀ ((I))Ā etc for a degree beyond the current (I)-(V). I hope we get that chance. It will be glorious to bust out that gigantic crayon. Word.
Housekeeping Reminder - Label placements should not be inferred as ātimingā projections. EW does not espouse āwhenā, just likely āwhereā price targets are hit before turning back up or down. Labels are placed on the chart for general ease of visualizing how the wave may develop at price points. There are some great analysts that post Bayesian Timing targets, but I have not seen any doing so for GME yet.
TL;DR -Ā Wave (i) of III almost complete with textbook fibs over the last three weeks. Wave iv of (5) underway, then wave v to complete (5)/(i). Once Wave (i) completes, as early as Friday 5/28 in the $270 region, Wave (ii) should retrace to the .618 distance of covered from $136 to $250. Wave (ii) target between $187-$203. Be prepared for that... diamond hand that so you can see the monster Wave (iii) of III. This is Elliott Wave... impulse wave need these retraces to coil up sentiment for the big spring up.
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In Ape -Ā These bananas up here are delicious, but just an appetizer for where going next. A little swing higher then a big rest before swinging up into much higher branches.
H4HU - EWApe/HODLer/ššš¼/I Like The Stock! I am long GME. I have never sold short.
To learn the basics of Elliott Wave, please visitĀ r/ElliottWaveTrading.
PLEASE NOTE:
This is not financial advice, I am not a registered broker and this is for entertainment purposes only.
Past performance does not equal future returns, and all equity investments entail risk.
The views expressed are the views of the author, and opinions expressed in the text belong solely to the author.
The views expressed are solely the authorās approach to investing in this specific equity.