Thursday, May 28, 2009

The Buyer/Seller War Continues

While the morning appeared to hold a bearish tone, the bulls were able to reverse the direction and close the market near its highs. This is a difinitive sign of a major battle going on as the bulls and bears are only able to muster enough strength on their home turf (near the trendlines). So, this is what the price pattern means in elliott terms:

- ST bullish. The pattern is a 4th/B wave triangle, with a likely completed pattern at today's low. Tomorrow should see a break above the trendline and a marginal new high. With the 200 DMA closing fast (930), we're likely so see price only trade to a marginal new high before reversing. Triangles are completion moves. After they break in the direction of the original trend (in this case up), they will quickly reverse.

- Bearish. The pattern is a series of subdividing 1-2 (or A-B) price patterns. The continuation move would be a 3rd of 3rd of a 3rd, which would cause significant devastation.

Should we break higher, I will plan on waiting for a major reversal bar before adding to shorts. Should we break lower, then I'll plan on taking profits in my original 790-830 zone.


  1. Hi Rich,

    Possible double three. Flat+Triangle.

    The reason why I shy a away from the simple triangle is because I see a clear five wave down where most people would have wave c. Could be wrong but lets see how things workout.


  2. And possible solution might come from here as well. In my view eurodollar need to hit 1.618 extension at 1.4162 and that´s final W5, before than happens it´s simple or complex W4 below 1.4020.

  3. Rich, Great update. I think we complete 4 soon.

  4. Mika Good call on the Euro. Now do you think we'll get a good correction?