Thursday, 19 July 2012

Overlapping waves in S&P and EURUSD, means correction!

 S&P is rising in an overlapping pattern. Higher highs and higher lows have pushed the index higher than the 61,8% retracement of the entire decline from 1422. According to elliott wave rules, wave 2 should not overlap wave 1 by more than 100%. There is a slim chance that this overlapping upward wave move is part of a bigger impulsive move and the market makes small 1-2 waves. As I said this scenario has less chances relative to the scenario that we are in an upward correction. I believe it is more possible we are in an upward correction that will not break 1422 and that June lows will be tested if not broken. Bulls will continue to feel comfortable as long as the last low is not broken ( 1325). Support levels also include 1345-1325-1310 cash price).

A similar overlapping pattern is seen in EURUSD. As noted in a previous post, the pair managed to move above the middle pitchfork resistance. It backtested the pitchfork level that was broken and now tries to recapture 1,23. This upward move is most probably a correction and the downtrend will resume towards 1,20. Support lies at 1,2210 and 1,2160. This upward correction could reach 1,24 as mentioned in previous posts as long as support levels hold.

Thank you for taking the time to read my wave analysis.

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