Last week we witnessed a 3 % pullback from 1687 to 1636. That marks the fourth 3 % pullback that we've had since the November low. There are many indicators that are now turning bearish. I think there is a good shot that prices rally back up to the 1667 to 1675 area to set up a lower high. But prices need to clear 1655 in order for that to happen. Should prices set up a lower high it would open the door to a 5 % pullback or a correction. If prices pullback to the rising trendline and/or the 50-day MA, that would be a 5 % pullback, breaking the previous trend of buyers coming in after a 3% dip. Now if the trendline is taken out, that would open the door to a correction that could produce a decline of 7 to 12 %.
The second charts down showcases two possible Elliott Wave counts. The first one features a 5% pullback, in the form of an abc pullback that holds above the rising trendline. The second scenario presents a much deeper correction, with a 5-wave push lower. Possibly down to the 1485. A break in the trendline would suggest that a change in trend, so this wave would be the first minor wave of a larger wave 1. See the two charts below.
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