Hare are my DeMark-ians thoughts on "Three Drives pattern" (Though - just an idea of Bobby being "inventor of it gives me goose bumps)
First - "definition"
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Although it was not specifically identified, one of the first references to a Three Drives pattern was outlined in Robert Prechter's book, "Elliot Wave Principle." He described the general nature of price action that possessed either a three-wave or a five-wave structure. Adapted from this principle, symmetrical price movements that possess identical Fibonacci projections in a 5- wave price structure constitute a Three Drives pattern. In "The Harmonic Trader," the patterns importance of other larger retracements and projections improved the accuracy of the pattern in real trading situations. The book was one of the first to emphasize the the critical aspect of this pattern that each drive complete precisely at consecutive harmonic ratios - either a 1.13, 1.27 or a 1.618. Also, the price legs should possess clear symmetry with each drive forming over equivalent time periods.
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Below chart illustrates validity of basic requirements for 3d pattern - and it is very close to 1.618 ratio (which is used in calculating target for 3 and 5), but if you look closely - 3 target was undershoot and I expect 5 to be shorter than "targeted" wave (RSI of w5 new highs vs. w3 highs so far does not hint on 5 extension )
What am I saying is that, yes, market might and probably will go higher, but for the purpose of “3dp” conversation – I think this “current hump” is finished.
11/19/2009
Futures approx. BO
Daily Range Projection
Low
High
/ES
1104.50
1114.50
SPX
1106.07
1114.59
/NQ
1782.25
1804.25
NDX
1786.78
1804.64
/DX
74.782
75.226
