Formations on IWM Leading To Imminent Downward Correction
The
IWM
Russell 2000 cap-weighted ETF is showing signs of very imminent downward movement, backed by Elliott Wave Theory, Fibonacci Retracements, and its Relative Strength Index (RSI).
Elliott Wave Theory is a beautiful and fundamental tool for analyzing price action, though it can exhibit many inaccuracies when used to forecast future price movements. In order to determine, in real time, the pivot points at which the wave legs will see a reversal, other indicators and technical studies must be used in conjunction to quantify these price levels.
I have identified (in the past as well) this Elliott Wave Pattern, but too early in the pattern to quantitatively forecast corrective retracements. According to the pattern, we are currently in the fourth leg. To find the point at which price action will look to bounce and continue to finish the overall downward trend (before entering the ABC reversal), I looked at the reversal at point 2. Here, price action perfectly bounced off of the 50% support level and began to form the third leg. (See the point on the chart marked "Bounce off of 50%".) This proved the effectiveness of the cooperative conjunction between Fibonacci Retracements and Elliott Wave Theory.
Using this understanding, I placed the Fibonacci Retracement between points 2, 3, and 4 (what I'm calling 4). At this point (end of day on Monday 6/10/19) IWM is trading at $151.75. This price level is leaning towards a bounce off of the 61.8% level, or $152.05. The RSI on this hourly chart read >70, a sign of overbuying.
If the volatile market paves the way for a news-propelled daily price-action gap (presumably on the upside), we can also expect the fifth leg to form after a bounce off of the 78.5% level, or $153.83.
Summary:
Especially on these higher time-frames, such broad ETFs are very closely correlated. The ETFs I have in mind are:
SPY
(S&P 500),
QQQ
(Nasdaq), and
IWM
(Russell 2000). This means that if the IWM pattern proves correct and is followed, very similar movement will almost certainly occur in these other assets and across asset classes.
Rough and volatile market times: keep your eyes open! Please like, follow, and share.
IWM
Russell 2000 cap-weighted ETF is showing signs of very imminent downward movement, backed by Elliott Wave Theory, Fibonacci Retracements, and its Relative Strength Index (RSI). Elliott Wave Theory is a beautiful and fundamental tool for analyzing price action, though it can exhibit many inaccuracies when used to forecast future price movements. In order to determine, in real time, the pivot points at which the wave legs will see a reversal, other indicators and technical studies must be used in conjunction to quantify these price levels.
I have identified (in the past as well) this Elliott Wave Pattern, but too early in the pattern to quantitatively forecast corrective retracements. According to the pattern, we are currently in the fourth leg. To find the point at which price action will look to bounce and continue to finish the overall downward trend (before entering the ABC reversal), I looked at the reversal at point 2. Here, price action perfectly bounced off of the 50% support level and began to form the third leg. (See the point on the chart marked "Bounce off of 50%".) This proved the effectiveness of the cooperative conjunction between Fibonacci Retracements and Elliott Wave Theory.
Using this understanding, I placed the Fibonacci Retracement between points 2, 3, and 4 (what I'm calling 4). At this point (end of day on Monday 6/10/19) IWM is trading at $151.75. This price level is leaning towards a bounce off of the 61.8% level, or $152.05. The RSI on this hourly chart read >70, a sign of overbuying.
If the volatile market paves the way for a news-propelled daily price-action gap (presumably on the upside), we can also expect the fifth leg to form after a bounce off of the 78.5% level, or $153.83.
Summary:
- Elliott Wave Theory alone cannot forecast precise price action, but when used in conjunction with Fibonacci Retracements, bounces can be quantitatively projected.
- Based on this, we can expect the fifth and final downward leg of IWM to form as a bounce off of the 61.8% retracement level, or $152.05.
- If the daily gap patterns persist (Tuesday opens as a gap up), likely on the upside, price action will presumably find itself combatting with the 78.6% resistance level, or $153.83, before continuing the overall retracement to become the fifth leg of the Elliot Wave pattern.
Especially on these higher time-frames, such broad ETFs are very closely correlated. The ETFs I have in mind are:
SPY
(S&P 500),
QQQ
(Nasdaq), and
IWM
(Russell 2000). This means that if the IWM pattern proves correct and is followed, very similar movement will almost certainly occur in these other assets and across asset classes. Rough and volatile market times: keep your eyes open! Please like, follow, and share.