On Monday I stated that price action either began a complex w.iv decline or it ended at the 1214.75 low. Yesterday a new high was struck that might indicate that w.3 had been struck. However, today's decline still leaves the potential for a more complex forth wave at the daily chart level. What's important is that we recognize that the decline from 1124.75 is an unfolding forth wave (either w.iv or w.4) on lower time frames. Therefore on a short term basis I am looking down. Downside targets are between 1180.5 - 1153.25 ( the .236 and .386 retracements of wave 3) on the daily chart level. A close beneath 1126.75 on the daily chart level would create wave overlap that would signal that a significant top had been struck. In my next Week In Review I will be discussing several alternative wave counts that lead me to believe that a significant decline is still in forthcoming.
After the close Cisco reported earnings that beat but the stock sold off hard. The NQ_F are down significantly while the YM_F and ES_F are also down. So unless this is a fake out in the ON session, I expect weakness at the open.
Here's the Market's Position as of the close:
Momentum Indicators: OB on Weekly and Daily chart levels but both have turned down indicating a possible selling opportunity. 60 min chart is bullish and in OB territory.
Pattern: At weekly chart level: w.iv or w.4 of w.c of wave.2 ( or other alternative counts instead of w.2 - all with bearish implications)
Time: No change from previous comment.
Trade Strategy: Looking to establish a bearish position as 60 min momentum indicator makes a bearish reversal. Downside targets are between 1180.5 - 1153.25.
Best of Trading
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