Back in July when Berkshire Hathaway B (NYSE:BRKb) was trading around $171, I noted that the upside was not finished and that price should go toward the $184-$199 zone to complete wave 5. Price has reached this area.
So far, the form of BRK-B's rise is almost identical to text-book formations. Too good to be true? Well it is what it is. So what's next?
Even if we zoom in closer, the price formation of the wave 5 seems very close to completion, if it has not already done so.
Wave 4 does not overlap with the high of wave 1. What will indicate that this trend is over? The first warning we got is from the RSI in the daily chart.
Important bearish divergence signs in the RSI and MACD. Another bearish sign will be if price breaks below $185.97 and an even stronger one will come if price breaks below $183.80. In case price confirms our view and starts the bearish reversal, we should pay attention to the form of the decline because an impulsive decline will be a bearish sign, while a corrective form of a pull back could imply that we are just seeing a correction and the up trend will resume.
It is very difficult to pick tops and reversal points. But Elliott waves is a tool that can help us identify possible reversal levels and when a certain trend might end.