Wednesday, February 24, 2010

The options expand...

Today's price action elminated the wave 4 scenario quite clearly but gave us a few others to consider. In times like these I think it is important to be more conservative and allow the market to let you know which way its going to go. So here they are:

(1) Subminuette wave 4 completed at yesterday's lows and we will test the minute wave 2 highs tomorrow. Here's what I like about this scenario:
- Waves 2&4 have price symmetry (1:1)
- We essentially tested the AH lows that were put in last Friday
Here's what I don't like: the impulsive count is very messy.

(2) Subminuette wave 2 completed at today's high. Here's what I like about this scenario:
- Micro waves W&Y have price symmetry (1:1)
- This should catch a lot of people on the wrong side with a gap down below 1100 at tomorrow's open.
Here's what I don't like: the micro wave 1 was pitiful.

(3) Subminuette wave 2 completes tomorrow morning with a restest of today's high, possibly an exhaustion gap. Here's what I like: this gives the price action to go a little higher and give us a proper wave 1 down.

Overall, I have to say I prefer scenario 2, but we'll see what the market gives us tomorrow.
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