Looking at the above S&P daily chart there is a far from perfect 5 wave rise from the lows on the year around the 1045 level. The reason this rally is far from perfect is mainly due to its clear 3 wave rally off the low that can be seen on the hourly chart (see rise from 1045 - 1080 in bearish alternate count below). So I'm not completely sold on this bullish count at all. The problem is that the bearish count suggests quite a long and extended wave 2 rally that is getting quite carried away from an EWP "right look" perspective in my opinion, so this 5 wave rally needs attention. Plus, in 5th waves, there are often divergences in price and momentum where price makes a new extreme but momentum does not. Well a turn down tomorrow would confirm this divergence as seen on the MACD histogram It could still be a 5th wave within a larger correction, but I would need the market to prove that to me before I assume it.
Despite this bullish count being my primary view, I am not getting long quite yet. I want to see the speed, strength, and wave structure of the upcoming decline to determine if it's a correction before surging higher again, or if it's a resumption of the downtrend where I need to make my bearish count the primary view. In other words, right now I'm neutral as far as actually taking a position anywhere in the market.
S&P 500 Cash Alternate Bearish Count
Above is my 1hr bearish count that has a WXY combination correction in its last phase. Although I see no signs of a top yet, once it does top and reverse we should see an extremely strong wave 3 decline with increasing volume and almost all sellers in the market creating nice 5 wave impulsive moves to the downside. Without those pieces of evidence, I will assume the decline is just a correction before surging to higher levels as long as the market stays above 1045.
In summary, I want to wait until the market declines again so I can review the structure to try and determine what the larger trend is. Until then, my slight preference is that of a bullish count that will be looking for the market to eventually charge higher in the coming weeks. I do not have enough certainty to take a position at this point though, so I'm neutral as far as trading goes.
GBP/USD
What a slap to the face I got this morning by closing this pair a bit early. The pair tanked this morning after I closed my short position last night, making me leave a lot of money on the table. But that's the trading life I guess. I still was able to make a nice profit on the overall trade, so in that respect it was a success, and with the open gap and 5 wave decline looking complete, I can't fault myself too much for booking profits at that juncture. But hindsight's 20/20.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
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