On 9/7/20 the SPX bottomed almost exactly at a .382 retrace of what appears to be Minor wave 3. If so, it could be a completed wave 4. Wave fours typically retrace about .236 or .382 of third waves. Its possible the supposed wave 4 could require more time, note that wave 2 took about five trading days to complete. So far the supposed wave four has only traveled about two trading days.
Note the daily RSI hit its highest value since the rally began in March. The vast majority of the time with stocks and stock markets, RSI will register at least one bearish divergence before a significant price peak is reached. The maximum RSI reading implies higher SPX prices in the coming weeks.
Mark
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Error made on the date listed at the beginning of this post. Correct date is 9/4/20. Sorry for any confusion.
Thanks Mark, fine idea. Especially tyvm for insight on RSI divergence before the top; agree expect a double top formation before the bear really prowls.
Watch for RSI divergence on the lift to second test of ATH...
so this is 4 of 3, to be likely followed by a 5 of 3 and then a Full wave 4? such wave 4 would return to original wave 2 region, is that how you see Elliot wave too? thank you
Hi thanks for the question. If what you are referring to as original wave 2 is what I have illustrated as (2) with bottom at 2766.60 - the answer is no.
That would be too deep for a wave (4) retrace. Wave fours typically retrace about .236 to .382 of the prior third wave. Going back to wave (2) would be about a .90 retrace.
Maximum wave three retraces are in the area of .66.