26 Mar 2014

My indicatros tell me we are in a down phase, but my EW tells me we are possibly ending a 4th wave and should rally.  Price action by end of day, at the last hour is suggesting a strong move lower.  Have I possibly count an ABCDE rather than an A- abcde for B - C wave lower to come?  With EW anything is possible, and odds do not favour the trader.  What we do know is that EW can clue us in on some patterns that show if we are corrective or impulsive.  If we can sustain a lower low tomorrow breaking the Mar 14th low then I would eliminate the 4th wave ABCDE.  Now an ABC still exists for still another 4th wave, and as complicated as it sounds its actually just sub division.

This is why it is better to gauge through indicators as the main sentiments.  There are many clues that both scenarios are possible.  The bearish case has us making a head and shoulders pattern and a possible 1820 target.  Can this be our C wave? Or is this the start of a stronger move lower (a possible high made).  Unfortunately, an answer to one opens questions to another.  Lets now look at our indicator, which suggests that we are still on a down-trend. 

MT: DOWN
ST: DOWN
PA: DOWN

There are disadvantages for both use of analysis.  With EWT we could get ahead of ourselves and even count the wrong count.  With the use of the indicator a top or bottom might not be realised.  But if we are to choose which is the better choice of the two I would say there are better odds with the indicator.  So to conclude todays analysis.  We should stay short until we see a possible turn tomorrow.  The manner of the price move tomorrow will also dictate the strength of the CIT, and if we get an impulsive and large move higher tomorrow then it confirms the ABCDE on the EW pattern.  An impulsive down confirms that we are still in a down phase but a large reversal would then confirm an ABC move from the high made in early March.  I am not able to confirm an EW pattern for larger downside potential, but it doesn't mean it doesn't exist.

Both Bullish scenario at the bottom. 

ADDED: 4:45pm
This is my Best Bear Count...

I am getting ahead of myself here but this is typical behaviour of EW analysis.  We always get ahead of ourselves... lol.  Another BULL count.