Late last week we saw some topping action that suggested weakness going into this week. And we got it. But it may be over now. There is still a clear 3 wave decline (ABC) from the high on the year in the S&P, so a new high on the year seems likely. We can't forget that. Only the Nasdaq 100 managed a new high while the other major indices failed. Now, the rally from the wave C low looks impulsive, with the recent weakness this week being a wave ((iv)). If correct, stocks should be on their way to new highs on the year soon.
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If you close your eyes and pretend that there is not an ABC three wave decline from the high on the year, then this chart might convince you of taking a bearish position. There is an imperfect 5 wave decline that just completed on the intraday charts. This alone is not compelling enough to me to get short. But a failure to break above 1360 and a sharp decline to a new low would get me on the bearish side rather quickly.
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The euro is declining in a nice impulsive patern, it even subdivides nicely into 5 wave moves. The chart speaks for itself, the euro will confirm that it has started a major downtrend when wave 5 breaks down to a new low.
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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