30 May 2013

As stated yesterday, the triangle or wedging pattern is forming and today we saw a narrow movement.  Tomorrow is the last day of the week and also the last day of the Month.  It is critical here for both Bulls and Bears.  There is also a reactionary day and I expect nothing less tomorrow also since this wedge or triangle is in its last stage.  A move up keeps our Monthly open for the Bulls and the Bears will look to fight another day.  If we close down tomorrow preferably down to the 1630 range the bears would push this to new lows and possibly putting in an exclamation on the May 22 top.

One thing to note though and I mentioned it also yesterday.  This formation looks like a triangle to me and based on EW Theory, Triangles do not occur on 2nd waves but on 4th and B waves.  So if we are following EW then the two options right now is that E wave is done this afternoon or continues a bit tomorrow morning and pops to the upside.  This would signal that 4th wave is done.  If we move and break the triangle to the down side then we would have a C wave to finish of the 4th wave still.  Only then would we see a continuation higher.  It is not impossible for us to have a 2nd wave here, but question here is if this pattern really is done for the 2nd wave or does the price extend tomorrow to finish an abc green for the 2nd wave.

In the end of all this, follow the indicator...

Mid-Term: DOWN
Short-Term: DOWN