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Sunday, December 01, 2013 1:25:25 PM
Weekly Technical Analysis
By The wave trading
* Sunday, December 1, 2013
I MAINTAIN UNCHANGED THE SCENARIO OF A PULLBACK
I have to admit that it has been a major mistake underestimating the strength of this “bull” market. The fact that the pattern from the March 2009 is clearly corrective has erroneously induced my analysis in expecting a major top and a reversal back towards the 2009 lows, above all knowing that the FED continues to pour in the market $85 billions each month. Eventually there will be a meaningful correction but probably it will not endanger the intermediate trend.
Therefore if we get rid of the bearish wave (X) scenario we could have to options:
1. Rising Wedge: Price is involved in the late stages of the wave (C) of an Ending Diagonal Triangle. Once the wave (C) is in place a multi-year pullback wave (D) could bottom in the area of the 100 m ma which today stands at 1292. The following wave (E) up will complete the pattern
2. Ending Diagonal wave (C): Price is involved in the late stages of the wave (I) of an Ending Diagonal. The wave (II) could have the same target of the wave (D) of the Rising Wedge scenario.
Monthly momentum indicators are overbought but the RSI is not displaying a negative divergence therefore as long as the trend line in force since the February 2009 low is not breached the intermediate trend remains up.
If we maintain valid that from the 2009 low price is unfolding a Double Zig Zag then from the October 2011 price is unfolding the second Zig Zag.
The next Fibonacci extension target is located at 1936.
The trend remains clearly up as long as the 3m ma holds. This moving average, which stands at 1749 almost, coincides with the 50 dma.
A meaningful correction or even a trend reversal could occur if the 10 m ma = 1649 is breached. The 10 m ma is standing slightly above the October 9 low; therefore this is the major pivot support.
If we zoom in to the time frame from the October 2011 low and we use moving averages as a gauge of the sustainability of the up trend, likewise we can deduce that the last up leg which began at the October 9 low will not be in danger of being reversed as long as the 5 m ma which today stands at 1713 is not breached.
If the EW count that I am following is correct the upcoming correction will be a shallow one since price should not breach (End of month print) the 3 m ma = 1749
Regarding the long-term EW count, If on October 2001 price established the wave (X), in my last weekly update I have suggested two options:
1. Double Zig Zag: If this is the case price is now unfolding the last wave (5) of (Y). Since the advance off the October low is clearly corrective the assumed wave (5) has to form an Ending Diagonal. The Equality extension target for the wave (5) is located at 1911.
Continued...Click here
George.
Click on "In reply to", for Authors past commentaries.
By The wave trading
* Sunday, December 1, 2013
I MAINTAIN UNCHANGED THE SCENARIO OF A PULLBACK
I have to admit that it has been a major mistake underestimating the strength of this “bull” market. The fact that the pattern from the March 2009 is clearly corrective has erroneously induced my analysis in expecting a major top and a reversal back towards the 2009 lows, above all knowing that the FED continues to pour in the market $85 billions each month. Eventually there will be a meaningful correction but probably it will not endanger the intermediate trend.
Therefore if we get rid of the bearish wave (X) scenario we could have to options:
1. Rising Wedge: Price is involved in the late stages of the wave (C) of an Ending Diagonal Triangle. Once the wave (C) is in place a multi-year pullback wave (D) could bottom in the area of the 100 m ma which today stands at 1292. The following wave (E) up will complete the pattern
2. Ending Diagonal wave (C): Price is involved in the late stages of the wave (I) of an Ending Diagonal. The wave (II) could have the same target of the wave (D) of the Rising Wedge scenario.
Monthly momentum indicators are overbought but the RSI is not displaying a negative divergence therefore as long as the trend line in force since the February 2009 low is not breached the intermediate trend remains up.
If we maintain valid that from the 2009 low price is unfolding a Double Zig Zag then from the October 2011 price is unfolding the second Zig Zag.
The next Fibonacci extension target is located at 1936.
The trend remains clearly up as long as the 3m ma holds. This moving average, which stands at 1749 almost, coincides with the 50 dma.
A meaningful correction or even a trend reversal could occur if the 10 m ma = 1649 is breached. The 10 m ma is standing slightly above the October 9 low; therefore this is the major pivot support.
If we zoom in to the time frame from the October 2011 low and we use moving averages as a gauge of the sustainability of the up trend, likewise we can deduce that the last up leg which began at the October 9 low will not be in danger of being reversed as long as the 5 m ma which today stands at 1713 is not breached.
If the EW count that I am following is correct the upcoming correction will be a shallow one since price should not breach (End of month print) the 3 m ma = 1749
Regarding the long-term EW count, If on October 2001 price established the wave (X), in my last weekly update I have suggested two options:
1. Double Zig Zag: If this is the case price is now unfolding the last wave (5) of (Y). Since the advance off the October low is clearly corrective the assumed wave (5) has to form an Ending Diagonal. The Equality extension target for the wave (5) is located at 1911.
Continued...Click here
George.
Click on "In reply to", for Authors past commentaries.
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