Wednesday, November 4, 2009

Did we finish wave 2?

This is a hard question to answer. We traced out a completed a-b-c pattern at today's high; however, it never reached the target zone only managing to retrace a bit more than 40% of wave 1. Normally, I would say we're a bit early on this wave 2 finish, but I guess we'll know tomorrow morning how this is going to play out. Should we close below 1038 on two consecutive 15 min bars, then we have very high odds that we've already started wave 3. Otherwise, we should see any weakness in the morning get reversed with an up close tomorrow. That would signal that we are likely still headed to our wave 2 target to be completed by Friday/Monday.

The wildcard in this is likely the US$. It has already had a decent retracement of its move off of the bottom, so if it takes out the prior pivot highs, then wave 3 will have started. Any gap down that is not closed would be a sure sign that we have started wave 3.


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