Charts, page-4082

In our ongoing search for a bottom we have some interesting developments today.

You will recall that the first possible bottom was circa 524, about which I admit to not being convinced of its likelihood. As things have evolved 524 has become a serious contender. As you might also recall I suggested that it would be safer to wait for the retest / double bottom (or in EW terms wave 2) which should retrace to the 78% fib or the big green line near the (C) on the chart below. The big channel is called a support channel and the retrace marked A-B-C should retrace so that the A wave finishes in the top half (above the dotted line) and the C wave finishes in the bottom half and in this case on or above the top green line. The closer it gets without exceeding the line the happier we become. A reversal at that point (the blue arrow) will give a wave 3 target of 568.

Although not pictured, the 61% fib line would also be a convincing bounce point which come in at 531, so if it bounces convincingly circa 527 to 531, I'd say that is the signal of a recovery for the moment, and certainly for what I have been waiting. If it punches through through the line it is going further south and probably to my original target of 503 (and cleaner target from the perspective of a wave 2 retrace (although I suspect that 524 is probably the 61% equiv of the large wave 1 & 2, in which case it is clean enough).

Now one thing to note is that the rising wedge break point (the green triangle thingy) gives a target lower than the big green line, only by a few cents but never the less it presents a risk that the target will not hold.

As I type the retrace has hit 535, which is about 50% and the absolute upper limit of a wave 2 retrace in my experience, and very rare, so I expect it to continue from here for a little bit more.

Lastly the blue arrow is not drawn to indicate timing, but note that the vertical line marked "5" is the 5fth fib time line projected from the A & B waves of the original retrace start. You may recall I mentioned that these lines usually indicate turn points - you just don't necessarily know ahead what the turn is, and in this case it was the break of our potential wave 1 top - being the 5th subwave of the rise from 524 marked (v) on the chart. Oh, and lastly, lastly, note that the EW minuet waves (i - v) are not actually a well formed EW pattern in that wave III did not reach its target of 551, really they formed a 5 step correction wave.

Anyway, watching for a bounce any time from now.