Last week provided the most interesting week in quite a while. For the EWT fans, the classical 3 wave bounce we were mentioning last week proved to be exactly what it seemed. And the market proceeded to resume the main trend (down) with conviction. Tuesday’s drop was impressive with 40 points between top and bottom and the market closing near the lows. Continuing with the EWT interpretations, bigger picture, the decline off the ATH looks like a 3 waver. The 3 wave bounce mentioned before being the B wave of this larger A-B-C correction. The C wave doesn’t look done, so new lows are likely, however from there it is possible that the market rallies again strongly and makes new ATHs if the decline off the ATH is just a 3 wave correction. No way to tell that now, although where the current wave down will finish will provide a good clue.
Due to the strong decline, the weekly cycles had their directionality begin to move down, in a sign that the correction is something more than just a small dent in the up trend. No other signals so far, but we are on the lookout for a potential bullish retrace (BR) support which could trigger.
Same story on the daily cycles. No bullish retrace (BR) support just yet, but directionality is more advanced than on the weekly, having hit its lowest level already and staying there. The initial move of directionality on the daily was a nice signal showing that the decline was not done with the 1st wave down off the ATH.
The 288 and 480min cycles
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