Wave pattern warns of possible steep drop this week
There are plenty of doom sayers out there, and a brief glance over my prior posts should show that I'm not a perma-bear. The late-October/early September mini-crash definitely set the stage for continued selling, but I've been waiting for a more clear pattern to indicate the next leg down is starting.
The September 18 break down out of consolidation seemed like the start, but what ensued over the next week was a very orderly move lacking any momentum.
I had to wait for enough price action to start getting a feel for a wave pattern, which was not initially very impulsive (5-wave) in nature.
That brings us to the chart, which I believe is showing a series of 1s and 2s, or in other words the building blocks of an extended wave on this timeframe which will ultimate constitute a large wave down on larger timeframes.
I started to frame out future price action using common rule-of-thumb Fibonacci price levels for the coming waves. Going much further would be a waste of time, since the picture may change drastically based on actual price behavior.
The good news is if I'm right about the count, there should be a decent bounce tomorrow, which will allow adequate time to position for the coming selling, which will be much more significant than what we saw today.
The September 18 break down out of consolidation seemed like the start, but what ensued over the next week was a very orderly move lacking any momentum.
I had to wait for enough price action to start getting a feel for a wave pattern, which was not initially very impulsive (5-wave) in nature.
That brings us to the chart, which I believe is showing a series of 1s and 2s, or in other words the building blocks of an extended wave on this timeframe which will ultimate constitute a large wave down on larger timeframes.
I started to frame out future price action using common rule-of-thumb Fibonacci price levels for the coming waves. Going much further would be a waste of time, since the picture may change drastically based on actual price behavior.
The good news is if I'm right about the count, there should be a decent bounce tomorrow, which will allow adequate time to position for the coming selling, which will be much more significant than what we saw today.
Comment:
This count was invalidated with the reversal on friday coupled with this morning's bullish action. The 196 key level will be taken out on the open. Time to step back and wait for more development.
In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there's nothing more for you to do. - William Eckhardt