Friday, August 21, 2009

Monday 8/17/09-Friday 8/21/09 4m Chart

The market moved much higher today in what appears to have been the point of recognition or halfway point of wave C of (Y). It this is incorrect and wave [iii] of C is not underway, the next most likely alternative is wave (iii) of [i] of C as shown above. This is a very bullish count so it does not appear to be as likely.

Notice the significant momentum up today as can be seen on the MACD and RSI. This is an indication that this was a "3rd of a 3rd" wave. Divergence should be seen on a larger scale before any top is called. Wave C is still small compared to wave A so there should be a continued rally in the coming days. Some targets were discussed in yesterday's post.

On a smaller level, the price action after the top looks like a triangle with an impulsive thrust breaking out of the pattern. Triangles in second waves are not allowed, so this helps confirm the count. Because the impulse was larger than the widest part of the triangle but small compared to the preceding waves in the impulse on a distance and time scale, perhaps the market will move higher at the open on Monday. Also the waves after the peak were choppy. The bullish scenario for at least the first part of Monday comes very natural here.

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