The 5 wave down move is clear amongst major indices. The most possible scenario is that it is followed by a 3 wave upward correction. S&P daily chart shows clear impulsive move downwards with potential retracement target at the 61,8% level (1365). The decline took near 2 months to unfold. So the correction could be expected to end near end of July.
DAX along with the other major european indices has also made 5 waves down with an extension in wave 1. Wave 3 was not the largest wave but also not the smallest. So our count remains valid under EW rules. DAX has 6150 as resistance and 5950 lows as support. 6600 is textbook retracement target
CAC found support at the middle pitchfork and finished 5 waves down from March top and has the same wave form as DAX. 3350 level is the 61,8% retracement target for potential wave II.
Eurostoxx bounced at the middle pitchfork again and as well ended 5 waves down with the 3rd wave not being the smallest. So again we expect a countertrend rally to push the index the next month or two towards 2300.
It is important to note that the basis of the wave count is that the markets have changed trend and are moving impulsively downwards. Normally second waves should be avoided in trading as they are corrective and can take many forms. However entering long positions near the lows in any given pullback could prove a wise choice if the markets made an important bottom on Monday. With such a big bounce from Monday lows, it is essential that S&P won't break the lows at 1270 area. In the case that our basic wave count is wrong and we just started a new upward move to new highs, the long positions will compensate for wrong wave labeling.
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