Date: October 2012: SPX: Follow Up of the Short Term EWP | The wave trading
SPX: Follow Up of the Short Term EWP | The wave trading
SPX: FOLLOW UP OF THE SHORT TERM EWP
Today just a brief update
So far the “working” map is fitting in accordance with my preferred short-term scenario, which calls for a retracement of the June´s up leg.
Last Sunday I highlighted 3 possible EWP.
Today I remove the wave (C) off the September 25 lower high option; the other two candidates are equally balanced.
Potential short-term paths from the September 14 high:
1. Zig Zag :
Therefore yesterday, price should have begun the wave (C) down.
The wave (C) has an extension target in the range 1413-1386
2. Triple Zig Zag:
Therefore yesterday, price should have begun the third Zig Zag (ABC) down.
Yesterday´s reversal at the 0.618 retracement after having completed a Double Zig Zag is strongly suggesting that he bounce off last Wednesday´s lod is over, although there is no confirmation yet since the sequence of higher lows is still in place.
Bears today have to round off yesterday´s bearish set up with follow through to the down side.
The consensus is looking for an overall shallow pullback with a target at 1422 – 50 d MA = 1419. Then maybe 2 lower ranges could come into play:
If, as I expect, there is soon a break down below 1430 instead of guessing where price will establish a bottom, we need to see:
A completed EWP. Positive divergences. Extreme oversold readings of TRIN / TICK High CPCE reading Fear ==> VIX closer to its 200 d MAConclusion:
The internal structure of the pullback off the September 14 high is strongly suggesting that price is ONLY involved in unfolding a corrective pattern that once is over it will open the door to the resumption of the intermediate up trend. The potential target is located in the range:1. 50 d MA – 1396
2. 1396 – 1371
The catalyst for the next “take off” could be the announcement of the Spanish bailout, but earning season is also approaching, hence price may adopt a holding pattern. The immediate time frame is bearish biased since we don’t have a completed EWP off the September 14 high.Comments
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