“Those who have knowledge don’t predict. Those who predict don’t have knowledge.” Lao Tzu, Chinese philosopher, 6th century BC

PAYPAL

Friday 29 January 2016

29 Jan 2016 - 61.8% Run Thus Far

Price is now at 61.8% if wave-a (blue). Although the possibility of a resistance here is high, the intra-day indicator is now at OB and with an ST still up-trending, it does seem to have more risk of higher prices.  The lower move that I discussed yesterday did not come to fruition so this EW count down is now void.  We will see next week if we will see this C-blue become a run-away situation targeting the 50% ret. from the Nov. 2015 highs to this years low at 1963.

The month end closes with a tail to show a possible low in place but our mid-term signal needs to show a bullish sentiment for us to confirm this possible monthly reversal bar.  Most importantly though, the close today in the monthly bar will not change the indicators trend which will now print with a downside bias.  So even though a market can turn up on a bearish indicator, what is important to take from this is the "RISK" involved.  Every bar can produce a tail, every pattern can look corrective, but weighing the risk is the best alternative when putting in a trade, and to follow that with consistency can result in success.  Add to this the fact that the 75ma of the monthly chart is now reaching the 1600 level will be a good magnet for prices if it happens to break down from current support.  This 1600 is only surpassed by the 1550 target that the current high to support is featuring (also to some a possible H&S).  This 300 plus pts.  will possibly have us in a scenario where price drops so fast that it will tag the lower end of the target but close on a monthly at or around the 1600 level where the moving averages resides.

The above is only speculation, but we can plan ahead and watch for this possibility.  Keeping with the same analysis, I also added a possible agreement on M. Armstrong's recent blog where he is looking for a flush out before a move to bullish ATH.  The article can be found HERE.

SEN: Bearish
ST: UP
PA: UP



NOTE: Although we can see from reading the above analysis that a possible bottom can be had or can happen soon, we cannot rule out the bearish case where the market just collapses and never finds footing for a sustained bounce.  But this is what our indicators are for, and if you have trusted the indicator since June 9th of last year, you would have been unscathed by the volatile market.

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