Tuesday, August 17, 2010

Bears are on the ropes...

Today's price action pushed the limits of my resistance zone (earlier identified as 1088 - 1095. Price did, however, close below key resistance (1096) while being rejected (at least so far) at the 50% fib (1098) plus a couple of points. The RSI has reached a level which has been consistent with past rallies in the downtrend that took over the market in late April.

So is it 3 waves up or will it be 5? The move down the last part of the day has reached a level which equals the down move that would make up a potential wave 2. Should price hold this level tomorrow, then look for at a minimum a 5th wave (assuming no subdivisions). This would put our minor wave 2 count in jeopardy and likely the April top.

A move to 1082 should have enough selling behind it to confirm our minor wave 3 scenario.

Best of luck!
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