In my last post on this pair, I suggested that there wad 2 scenarios that I saw could be developing. One of them was the Scenario #1: A Simple 5-Wave Pattern going south. With the recent moves in the market, that scenario is becoming more clear. I’ll explain why I am now seeing this unfold and how you can take advantage of this.
First, to go back to a larger time frame, the daily TF, notice that the wave 2 (blue) of the wave (5) down trend was a . According to the Theory of Alternation, that means that wave 4 should be a of some kind. Here’s the from my last post:
So come back to the 4HR TF, what I am counting here in this scenario is that wave 4 was a simple flat as it should be according to the Theory of Alternation. That being the case, then the move down from the completion of the wave 4 was a wave (I) of 5 of (5). Then it follows that the move back up should be a wave (II) of 5 of (5). Judging from it’s very messy and complicated character, it certainly “fits” the definition of a corrective wave. Now the question is: is it done? It is now my opinion that “NO”, it is not! Or it could be….
The recent stronger than expected move back up to again retest the triple top gives a clue that it is about to break over that resistance and head higher in a wave (II) continuation to retest the wave (I) high. A fourth retest of that resistance more than likely will break it. Remember that wave 2’s can retrace 100% of wave 1’s. I would expect that at minimum, it should reach the .786 retrace but more likely the .886 though.
There is also a .886 that would be considered completed at the .786 but more than likely will reach the .886.
Here is the 4HR TF. Remember that still-waiting-to-be-filled POTENTIAL Bat? Well, it could get filled soon!
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