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Sunday, December 15, 2013 5:35:23 PM
Weekly Technical Analysis
By The wave trading
* Sunday, December 15, 2013
I EXPECT A LARGER CORRECTION
In my last weekly update I have changed my view regarding the “big picture”. Despite the pattern unfolded by price from the 2009 lows is clearly corrective the probability of a bearish outcome that implies a move back towards the March 2009 low is at the moment slim.
Eventually there will be a meaningful correction but probably it will not endanger the intermediate up trend.
I maintain the idea that from the March 2009 low price is unfolding a corrective advance, probably a Double Zig Zag. If this is the case the next theoretical extension target is located at 1936.
In order to consider that the assumed Double Zig Zag is over bears have to breach the 10 m ma which today stands at 1674. I establish the October low at 1646.47 as the intermediate pivot support.
In addition to the monthly pivot support, monthly momentum will have to confirm the intermediate reversal once the RSI breaks the trend line support in force since the 2009 low and the MACD rolls over issuing a sell signal
Therefore in order to consider that the EWP from the March 2009 low is over we need to see the following:
• RSI breaks the trend line resistance
• Stochastic loss of the 80 line
• MACD rolls over
Notice that the RSI is not displaying a negative divergence hence odds are not supportive yet of a major decline.
Regarding the long-term EWP I can only guess two potential scenarios:
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 1300. 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.
Lets go back to the advance from the March 2009 low.
If price is unfolding a Double Zig Zag it is probable that the wave (W) was completed at the February 2011 and the following pullback established the wave (X) at the October 2011 low. This is the easy portion of the pattern. From the October 2011 low the count can be arbitrary and not exempt of erroneous interpretations but in my opinion we could make the case that price is now involved in unfolding the last wave (5) of (Y), which began at the October 9 low.
If price achieves the equality extension target with the assumed wave (1) the wave (5) could top at 1910
There is an issue with this EW count. Since the advance off the October 9 low has unfolded a clear 3-wave up leg, this pattern can only result in an Ending Diagonal. If the Ending Diagonal pans out it will open the door to a meaningful trend reversal.
Continued...Click here
George.
Click on "In reply to", for Authors past commentaries.
By The wave trading
* Sunday, December 15, 2013
I EXPECT A LARGER CORRECTION
In my last weekly update I have changed my view regarding the “big picture”. Despite the pattern unfolded by price from the 2009 lows is clearly corrective the probability of a bearish outcome that implies a move back towards the March 2009 low is at the moment slim.
Eventually there will be a meaningful correction but probably it will not endanger the intermediate up trend.
I maintain the idea that from the March 2009 low price is unfolding a corrective advance, probably a Double Zig Zag. If this is the case the next theoretical extension target is located at 1936.
In order to consider that the assumed Double Zig Zag is over bears have to breach the 10 m ma which today stands at 1674. I establish the October low at 1646.47 as the intermediate pivot support.
In addition to the monthly pivot support, monthly momentum will have to confirm the intermediate reversal once the RSI breaks the trend line support in force since the 2009 low and the MACD rolls over issuing a sell signal
Therefore in order to consider that the EWP from the March 2009 low is over we need to see the following:
• RSI breaks the trend line resistance
• Stochastic loss of the 80 line
• MACD rolls over
Notice that the RSI is not displaying a negative divergence hence odds are not supportive yet of a major decline.
Regarding the long-term EWP I can only guess two potential scenarios:
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 1300. 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.
Lets go back to the advance from the March 2009 low.
If price is unfolding a Double Zig Zag it is probable that the wave (W) was completed at the February 2011 and the following pullback established the wave (X) at the October 2011 low. This is the easy portion of the pattern. From the October 2011 low the count can be arbitrary and not exempt of erroneous interpretations but in my opinion we could make the case that price is now involved in unfolding the last wave (5) of (Y), which began at the October 9 low.
If price achieves the equality extension target with the assumed wave (1) the wave (5) could top at 1910
There is an issue with this EW count. Since the advance off the October 9 low has unfolded a clear 3-wave up leg, this pattern can only result in an Ending Diagonal. If the Ending Diagonal pans out it will open the door to a meaningful trend reversal.
Continued...Click here
George.
Click on "In reply to", for Authors past commentaries.
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