Good morning, traders. I hope you are enjoying the holidays and had a great time with friends and family yesterday. I am still battling these cedar allergies, so we will see how long I can keep the live stream going this morning. The last analysis I wrote had us working on wave 4 as a running flat as well as a re-accumulation without a Spring. Since that time, price dropped below A which could make it an expanded flat, and re-accumulation could still be the plan that's playing out with this drop below A being a Spring. Wave C will generally retrace about 1.62% of Wave A. That means we could see price ultimately heading toward $3520 before making a higher high. We also know that an expanded flat usually targets the 50% retracement of the previous move which is where we hit exactly with the lowest part of this move down. The blue TR denotes the large accumulation zone and the purple TR denotes the smaller distribution or re-accumulation zone.
There is also the possibility that we could've completed 5 waves up with this current move down being wave 2. In that case, a move toward $3500/$3600 would be the 61.8% retracement of wave 1, which is what we generally look for as a sign of another strong impulse wave readying itself. That level is also the next area of support. However, we have just seen price print a descending wedge which often, but not always, marks a reversal. This current level of support also means that price is hovering around the 4H pivot while printing a small accumulation or redistribution pattern. The thing that bothers me the most at this time is that the 4H RSI did not return to oversold yet, which leads me to believe that if price continues up from here, it is most likely completing wave 5. The corrective larger wave 2 should then take RSI back down to oversold.
Most noticeable is that the volume on this drop back down has been much smaller than the volume on the push up. Remember, expanding volume with wider-spread candles is a sign that volume and price action are in agreement which means it is a trend. In this case, that is what we saw with the move up from the price lows, so demand is in control at this time. In either case, we should at least have one more leg up toward the low-to-mid $5000s. Whether that is a wave 3 (if we've had 5 waves up for the first larger wave) or a Wave C is yet to be seen.
Zooming in to the 15 minute chart, we can see the recent descending wedge as well as what appears to possibly be a descending broadening wedge. The two lows which I have marked with the blue arcs could potentially be a double bottom. This, as always, won't be confirmed until price closes above the highest point between them which is $3863.34. If it does, then the target based on that pattern would be around $4050. This puts it close to what would be the completion of wave 3, which makes sense. The key levels I am watching are the swing low at $3674.73 and that $3863.34 swing high. A close below the former or above the latter indicates the direction traders should be looking for price to continue taking. A closer look at this TF also shows a small blue TR. This appears to be accumulation on this small TF as we can see demand building and supply shrinking as denoted by the volume and price action. We can also see that the proposed wave movement lines up well with the volume nodes and the TRs, with this 5th wave up on the smaller TF coming to a halt right at the top of the purple re-accumulation? TR/large blue accumulation TR.
Taking a step back to look at the 1D, we can clearly see accumulation printing out. If we get a bounce anywhere from here to around $3500, then we should likely see accumulation playing out with a Spring. Instead, the low where we bounce would be the LPS. As I have mentioned numerous times before, a Spring is never required though it happens more times than not. This may also print the lowest point of the right shoulder of an IHS, as we have discussed many times before, which would give us that low-to-mid $5000s target. If that is a wave 3, then we can expect wave 5 to ultimately notch a top around $6000. If it is a wave C, then we can expect price to head back toward the 2018 lows. If price, in the near-term, continues lower than the $3500 general area, I would be looking for a break below the 2018 price low, creating a Spring, and then the bounce back up and out of the large blue TR.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
There is also the possibility that we could've completed 5 waves up with this current move down being wave 2. In that case, a move toward $3500/$3600 would be the 61.8% retracement of wave 1, which is what we generally look for as a sign of another strong impulse wave readying itself. That level is also the next area of support. However, we have just seen price print a descending wedge which often, but not always, marks a reversal. This current level of support also means that price is hovering around the 4H pivot while printing a small accumulation or redistribution pattern. The thing that bothers me the most at this time is that the 4H RSI did not return to oversold yet, which leads me to believe that if price continues up from here, it is most likely completing wave 5. The corrective larger wave 2 should then take RSI back down to oversold.
Most noticeable is that the volume on this drop back down has been much smaller than the volume on the push up. Remember, expanding volume with wider-spread candles is a sign that volume and price action are in agreement which means it is a trend. In this case, that is what we saw with the move up from the price lows, so demand is in control at this time. In either case, we should at least have one more leg up toward the low-to-mid $5000s. Whether that is a wave 3 (if we've had 5 waves up for the first larger wave) or a Wave C is yet to be seen.
Zooming in to the 15 minute chart, we can see the recent descending wedge as well as what appears to possibly be a descending broadening wedge. The two lows which I have marked with the blue arcs could potentially be a double bottom. This, as always, won't be confirmed until price closes above the highest point between them which is $3863.34. If it does, then the target based on that pattern would be around $4050. This puts it close to what would be the completion of wave 3, which makes sense. The key levels I am watching are the swing low at $3674.73 and that $3863.34 swing high. A close below the former or above the latter indicates the direction traders should be looking for price to continue taking. A closer look at this TF also shows a small blue TR. This appears to be accumulation on this small TF as we can see demand building and supply shrinking as denoted by the volume and price action. We can also see that the proposed wave movement lines up well with the volume nodes and the TRs, with this 5th wave up on the smaller TF coming to a halt right at the top of the purple re-accumulation? TR/large blue accumulation TR.
Taking a step back to look at the 1D, we can clearly see accumulation printing out. If we get a bounce anywhere from here to around $3500, then we should likely see accumulation playing out with a Spring. Instead, the low where we bounce would be the LPS. As I have mentioned numerous times before, a Spring is never required though it happens more times than not. This may also print the lowest point of the right shoulder of an IHS, as we have discussed many times before, which would give us that low-to-mid $5000s target. If that is a wave 3, then we can expect wave 5 to ultimately notch a top around $6000. If it is a wave C, then we can expect price to head back toward the 2018 lows. If price, in the near-term, continues lower than the $3500 general area, I would be looking for a break below the 2018 price low, creating a Spring, and then the bounce back up and out of the large blue TR.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.