I am posting this at a super precarious moment, but I figured I would throw it out there as a potential scenario to watch if it sets up. To be clear, depending on your risk management style, it would be wise to wait until the close of either a solid wave 2 or what may turn out to be a "B". Both of those structures typically retrace wave 1, or "A", 50% to 61.8% of its height. For my risk management style, sacrificing between .5 and .382 of the height of the previous wave 1, or "A", is very much worth the added confirmation of moving into a bullish structure to complete what could be a horizontal triangle.
Also In front of us, we have the previous downward trend line acting as resistance that I would want to see us break before I got involved in a trade. With RSI so deep on multiple timelines, we could have a SMALL ABC correction here and then a further move downward. As previously mentioned, I would also want to see the close of a 2 or "B". Even with RSI looking pretty rocked right now, this can still continue downward. In fact, this whole chart could be proven void before I get a chance to publish it. As always, the key is looking at the options and waiting for the correct confirmation to occur, rather than using some narrative that you've convinced yourself is going to occur.
Comment
⋅
I am very much waiting for that trend line to clear. This could easily happen right now.
Good call on the potential correction. This was a dramatic fall and I agree with your thought on the current state of RSI.... potential W formation. I'll be waiting for the close of B if we see a solid A.
MDuth
⋅
@JasonGerrard, I agree on waiting for solid confirmation with volume. Truth be told this is probably more likely to go back down than head back up for the top of the channel. But the option is on the table and with a solid volume confirmation, there is a chance that the set-up does occur.