Friday, January 15, 2010

1/15 - E-Mini : Final 5 or Top?





I know the charts are starting to get busy but I just wanted to highlight a few things I'm seeing.

The first chart shows the two possible options.

1. We have either wave [iii] down in progress or
2. Wave 4 completed with a wave 5 higher to come.

If this was only the completion of wave 4, wave 5 up would be next on tap and should complete this entire move up. The blue EW channel lines should provide a rough guide as where we should expect wave 5 to end. I placed a blue box there highlighting the potential range.

However, if wave [iii] down is in play a possible target area would be approximately 1115 if [iii] = 1.618 x [i] or 1107 if the H&S target is met. Refer to the second chart for further on a H&S (yes, again) in the works.

I like the argument for a new H&S because it works for both scenarios.

1. If the smaller degree count is correct. A 50% retracement of today's drop would place red iv near 1136. This retracement would form the right shoulder and possibly kiss the black ascending trendline before heading lower to meet it's target.

or

2. A wave 5 push higher would occur in an a-b-c fashion (since this should be an ED) and the target area would be the pink box area I have labeled as R Shoulder.

Based on EW channels, wave 5s may end at the mid-channel line (in this case the middle blue line). So if this scenario played out, wave 5 would hit that pink box area and kiss the blue mid-channel line.

This would result in the top for this push up and a new trend change down beginning with wave [i] would target the H&S target zone near 1107

A lot is going on. Of course the bearish scenario goes out the window if price pushes higher and passes the start of wave [i], 1148 in this case.

I believe the DOW and SPX broke through a few ascending trendlines today so a bounce next week will be met by those trendlines. We'll see if they hold. I will most likely post more charts over the weekend. I'll try to get counts on SPX, DOW and the Trannies.

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