Triaging Elliott wave counts with weekly stochastic divergences

Two maps, one ranking job

Elliott analysis can support more than one wave count on the same chart. The second labeling is an alternative wave count. It stays viable until a confirming filter ranks it below the working count.

The confirming filter is a separate technical study. It is used to promote or demote an Elliott count rather than to invent the count. The price structure still has to support both maps before the filter is asked to choose.

The slow weekly stochastic

The confirmation study applied for the longer-term ranking is the slow weekly stochastic, the slow D line of a 21-week stochastic. Paired weekly charts were used over the same span. One chart carried classic Elliott labels on the industrial average. The other carried the 21-week stochastic.

On that weekly stochastic, readings above 70 were associated with strong advances and readings below 30 with strong declines. Those threshold zones mark where the ranking study treated an advance or decline as strong. They do not replace the wave labels.

What wave-degree conformity requires

Wave-degree conformity is the matching rule. Major Elliott impulse and corrective waves should print major stochastic tops and bottoms. Lesser waves should print lesser oscillator patterns.

Bullish divergence is a lower price low paired with a higher stochastic low at a candidate wave trough. Bearish divergence is a higher price high paired with a lower stochastic high at a candidate wave peak. The divergences tag candidate ends. They do not draw the count.

How the paired weekly charts were read

The August 1982 cycle-degree low was marked with a stochastic trough and bullish divergence. The next Primary advance was marked as ending with stochastic highs and bearish divergence. That pairing is the degree test in both directions: a cycle-degree low with a major oscillator trough, then a Primary peak with major oscillator highs.

Inside the following Primary advance, the Major fourth wave was described as smaller in amplitude and duration than the prior Primary second wave, but larger than the preceding Major second wave. That comparison is a Primary versus Major degree check. A Primary correction should exceed a Major correction in both amplitude and duration. Both the Major third and Primary third peaks were tagged with bearish divergence.

The two counts at the 1987 high

On 25 August 1987 the confirmed count treated the industrial-average high as the end of a fifth of a fifth. That is a terminal impulse reading in which a fifth wave completes inside a larger fifth wave. If confirmed, it is treated as a candidate for a sizable correction. The fallback count treated the same high as a Major third after prior extensions.

Two later checks were left open. The first asked whether the stochastic would print amplitude and duration in proportion to a Primary fourth wave. The second asked whether a bullish divergence would appear if that wave ended and a Primary fifth began.