Tuesday, June 16, 2009

Breakdown confirmed

With today's continuation to the downside, we got our breakdown confirmation we were looking for. So far the move is sporting a nice 5 wave pattern. Where wave 5 ends is anybody's guess, however, I like to use wave parity relationships with wave 1 and strong support and resistance lines to identify probable turning points. We're starting see divergences show up on the hourly chart, which is another good indicator that wave 5 is upon us. Now if the market doesn't respect the divergences tomorrow morning, then we could easily fall to SPX 890 in an extended wave 5. This is especially true because the divergences are occuring around a strong support zone that should push the market back up.


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