Monday, June 21, 2010

Monday 6/21/10 Market Update

There was a gap higher this morning followed by a sell-off. This was not a surprise, but the ending diagonal idea suggested in Friday's update is no longer an option because prices broke down so hard.

A new impulsive wave [c] of flat wave 2 count above is now the primary count. This is illustrated above. If this is a correct assessment of price action, wave iv of (iii) of [c] has likely completed. The labellings above channel well, but waves ii and iv of (iii) look quite similar. This is not common. It is possible that wave (iii), not iii of (iii), completed today however. An extending wave iv is also possible.

The 1 minute chart above shows a closer view of recent price action. This area is still widely open to interpretation.

More than 61.8% of wave 1 has now been retraced. This is more than usual for a second wave retracement, however there is not a problem as long as prices quickly fall with each consecutive new high into the 1130s (there should be 2 more highs if the count is correct). Reaching 1145 is a big warning sign.

The larger view remains unchanged.

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