Yesterday’s action removed some short term options from the table, but has still left the pattern open to interpretation. It appears that I had Friday’s decline labeled properly as an impulse wave, but that doesn’t tell us with certainty whether that impulse was wave 1 or wave a.
As I’ve been warning for a few days, I believe bears need to remain very cautious right now. I’m still quite leary of the (x) wave count.
Below is the 1-minute chart, which shows the difficulty in nailing down a count with any certainty.
Next is the 5-minute chart. I’m almost equally split on the odds between wave 5-down having started, and the (x) wave count. The chart shows the expected outcomes of whichever count is correct.
If the wave 4 label is correct, then the market should not sustain trade above the red trendline. If it does so, then suspect that the (x) wave count is playing out.
And finally, the big picture alternate. It still remains possible that wave (iv) bottomed, though this seems decidedly less likely now that the 1367 price point has been overlapped and locked-in the view the the move from 1357-1388 appears to be a 3-wave form. I’m more worried about the (x) wave count — especially since the extended fifth wave practically begs for that count to play out.
In conclusion, I feel the market is in a somewhat dangerous position for traders who end up on the wrong side right now. There’s some room to run in either direction, and there’s little help from the market in sorting the impulse count from the (x) wave count. It’s a tough enough call that I’m basically equally divided between the two counts. I’ve labeled the (x) wave as an alternate simply to sort each count out.
Beyond that — from my point of view, since I continue to believe this is the fifth and final subwave of wave (i) down, there should be a big bounce lurking in the shadows soon. The question is whether the market makes the wave (i) bottom directly, or runs up quite a bit higher first. If the (x) wave plays out, I doubt bears want to hang on for dear life waiting for it to end. Trade safe.