Trend Continuation DOTDOT - Trend Continuation Setup
In my previous post, I outlined the primary scenario in which we had already seen an A- and B-wave, followed by a C-wave completing within the 23.6% to 38.2% Fibonacci retracement zone.
This scenario has now played out as expected.
From the bottom of the (C)-wave, I currently assume that we have already seen an impulsive Wave (1) of a new 5-wave impulse structure.
However, this move only slightly exceeded the level of the previous Wave (3), which is why I do not yet consider the trend fully confirmed.
For proper trend confirmation, I would now like to see a shallow / flat Wave (2) correction. Such a controlled pullback would allow price to build energy and then break the previous high impulsively.
This would also increase the probability of DOT breaking above the Daily 50 EMA, which would further strengthen the bullish case.
As long as this structural scenario remains intact, I consider the higher-timeframe bias to remain on the long side.
Alternative Scenario (Lower Probability)
An alternative - less likely, but still possible - scenario is that the move previously labeled as Wave (3) was in fact already a Wave (5).
If this is the case, the prior impulse would be fully completed.
Under this scenario, we would have to expect a full corrective move of the entire impulse before any sustainable trend continuation can develop.
Key confirmations would be a clear break in structure and a lack of impulsive behavior on the upside.
At the moment, this is not my preferred scenario. However, if price action and structure start to shift in this direction, I will publish a separate post including a full visual breakdown of this alternative count.
