What do you think? Pretty neat huh? Though this triangle was questionable in terms of EW rules, the OEX clearly displayed a triangle formation and indicated what to expect with SPX.
It appears we have finally reached the pinnacle of this long impulse up. That completion can be stated with a greater amount of certainty than at any other time in the past three weeks.
That being said, we will only get true confirmation that a reversal is in play if price does not break above 996.68, today's high, and when it breaks below 968.65.
Today's reversal lower may still be a possible correction before a turn higher. By the close, price retraced approximately 61.8% of the thrust out from this morning's low. The corrective structure looks like a zigzag as well.
Bottom line, the two levels above will confirm for us what we have.
Why 968.65 you may ask? If the 968.65 low was the beginning of a new impulse up and the rise from that low to the top at 996.68 were considered a wave 1, the correction which occurred today would be considered a wave 2.
EW Principle states that wave 2 cannot retrace beyond the start of wave 1. If the corrective wave retraces beyond the start of wave 1, in this case 968.65, then it cannot be considered a wave 2 and therefore the wave previous the corrective wave cannot be considered a wave 1.
Tomorrow we should see, if it is a new impulse down, a clear wave 3. Wave 3s are the easiest to spot. That will help us identify a new impulse. By the close today, it appears that wave 3 may be in progress.
Note that I have also labeled the corrective waves as abc as well. This is still a possible alternative count. We will confirm what type of structure we have in play surely enough tomorrow.
GL!
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