I'm anticipating a wave 4 correction to be in progress. The crucial question short term is whether this unfolds in a corrective combination (W-X-Y) or a triangle formation ( A-B-C-D-E ).
Above you see my preferred count for now due to the fact that we didn't see a clear break below the blue non-horizontal . In this scenario we most likely see a 1-2 pattern in green before impulsive wave 3 higher takes over. Looking for a reversal at lower time frames after wave 2 in a confluence zone like; , fib levels and psychological levels as well as previous demand will generate a high risk/reward potential. I prefer divergence trades out of these zones.
However we als see some kind of , the reason why I call this 'a some kind' is the fact that I like to use these indicative patterns from tops and bottoms. That said, if we see the get filled, it means a break out of the non-horizontal .
In this case I will be looking even more closely at Price Action, will it be a spike and move back above the non-horizontal trend line? (this will be a possible sign). Or will price settle, retest the and continue lower? (38.2% is a likely target of a which will be in line with the lower non-horizontal ).
The overall structure is corrective so once this correction is over we should anticipate an impulse lower for new lows.
So this pair should present trading opportunities, whether it is long or short is the question so we need to keep an open mind. Personally I favor an corrective combination with wave 3 higher to come but that's just for now and I will adjust to price action as described.
Please contact me for questions.