TWLO and Z updates 08/07

TWLO: blast off on earnings. So what’s the current prevailing Elliot wave perspective!? The first thing we need to discuss is how price rallied to the 1.618x Fib-extension late-March which is normally the wave-iii Fib-extension. Adding insult to injury is how price dropped to the 1.00x Fib-extension for what is normally a wave-iv. Normally under such ideal conditions, price rallies to the 2.00x Fib-extension (red dotted arrow) for a wave-v. BUT, the market had whole other ideas and decided to extend wave-iii beyond anthing one can logically foresee. I bring this up to show that Elliot Wave has its limitations as any and all analysis have. We can only project and forecast based on what it typically known for waves to do. Clearly the market can do anything it wants 😉 That said, price is now in minute-iii of minor-5 of intermediate-iii (possible all one degree higher), but bottom line is that price should target around $80 for -iii, then retrace for a zigzag -iv (fast and furious since -ii was a long drown out flat)  back to $55-52.50 which is now strong support before intermediate-v can target as high as $120.



Z: Took a nose dive instead on earnings so let’s see what is happening here. IMHO primary I completed after a long ending diagonal major-5 wave. Wave-a is now underway and should ideally bottom at around the 38.2% retrace. Wave-b can then ideally revisit the breakdown level (gap fill) before wave-c takes hold and brings price down to ideally the 61.8% retrace off the entire advance since the February 2016 low. Of course this is again using normal/ideal/standard/text book price patterns and we alreadt learned from TWLO that the market certainly can have much other plans. This is why I prefer to trade using a mechanical system as it doesn’t care what wave price is in, how far price will extend or retrace etc. All it does is give signals one acts upon. The rest will take care of itself: no 2nd guessing or wishful thinking or “if/then” scenarios. Systems are much more reliable and much more profitable!

Note how price was already making lower lows and highs going into earnings and had dropped below the 20d and 50d SMA.


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