After a sharp decline from 1565 to 1539, prices are testing once again recent highs with the potential to make new all-time highs. Our Premium services subscribers received the following tweet on Friday:
What followed next is known to everyone. Although I was very bearish on Friday, the wave formation of the decline made me think twice. There was no impulsive pattern. The prices were declining in an overlapping pattern, making me re-think the elliott wave count. Could this be a wave 4? And I concluded to the following wave count.
At 1539 low, prices must have ended wave C of 4. The upward move was just wave ((i)) of (v). Therefore I give more chances we see new highs towards 1575. For this scenario to be valid, prices should fall below 1544 and should not break the Monday low at 1539. Nevertheless, we should always keep in mind that we are most probably in the final stages of a bigger move from 1343. Caution for bulls is advised. Markets can turn down any time. Respect the support levels and don’t trade against them.
Going bullish for the short-term could bring some profits, but don’t forget to raise your stops along the way. Concluding, trend remains up despite the sharp 25 point decline. New highs are more probable to come before a large correction towards 1510. As much as I respect 1539, we should also respect 1566 resistance. If broken, we breakout towards 1575.
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