Sunday, May 9, 2010

Wave 4 almost over...

So far the price action is setting up a nice wave 4 triangle, which means that a real test of the panic lows is coming Monday/Tuesday. While a wave 5 extention could happen with price really falling apart, I have a hard time believing the bulls are going to give it up so easily. I have so far taken off about 1/2 my short position. I'll be utilizing the below targets to remove the final position in 1/3 increments.

So here's my primary count with key targets:

Wave d of 4 complete on Friday with wave e of 4 to complete near the open on Monday. I'm looking for a wave e completion anywhere between 1121 and 1132. I realize that is a wide target, but the volatility is such that is what we have to work with. The conservative entry is to go short with a break of 1103. The aggressive entry is go short on an intraday reversal bar: 5/15/60 min with 5 min being the most aggressive.

Wave 5 targets:
- conservative target: 1080
- likely target: 1055-1060
- aggressive target: 1035-1040

This forecast is invalidated with a move above 1138.
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