Quote from EWT:
Sorry everyone. I made this post but somehow the commentary didn't update. He's my comments for the 8/21/2010 post as well as the chart again.
Often when several scenarios present a greater tendency for trade in one direction you have to play it. The odds favored a decline (66%) and a 33% chance that trade would move higher. I'm not going to go over the trade but there were several ways to enter the market to the downside. Let's look at what occurred.
What we got was #1 as price traded below 1066.25. Indeed the higher percentage played out. Scenario #2 was eliminated on the break of 1066.25 but it is still to be determined if the expanded flat alternative is still in play.
The Next Trade
Regardless of the current wave labeling, the count suggests that trade continues up from the lows set on Friday. Current price action looks choppy and contains overlap ... a classical signature of countertrend moves. So the question to be answered it what's the hypothetical trade. We'll, if the current labeling is correct, price can't overlap 1083.75. If it did, the possibly of the expanded flat interpretation may still have some life. Traders should be looking for sell signals against critical resistance (1083.75). The ideal stop rests just above this level (1084). How one accomplishes this is determined by your trade plan with the underlying wave count confirming the completion of 3 wave up from Friday's low of 1061.75.
Best of Trading
Quote from EWT:
The Market took off to the downside right after the negative Jobless Claims number was released at 8:30 EST. Prices traded heavy all day and in an impulsive manner. I have provided a chart tonight showing two possibilities. I realize that there is allot going on in the chart so let me explain. If anyone has any questions,please e-mail me.
First there is a base channel drawn from the top of wave 2 blue. It provided structural resistance at 1098.5. There is also another channel draw which is a corrective channel. Notice the upper boundary crosses 1100.75 (more on that in a minute).
I have depicted two possibilities here:
1. That we are working wave i blue of wave (iii) purple of 3 (blue). If this is the operative count, then we should see further selling in the overnight session or into the first part of Friday's trade.
2. I also have labeled the chart for a W-X-Y, "Double Three" flat pattern that would complete around 1100.75 whereas wave W=Wave Y. This aligns well with the upper boundary of the corrective pattern. I would look for the channel to provide resistance! Should this scenario play out, I'd expect trade to turn tail quickly from today's close as trade can't go beyond 1066.25 for a regular flat correction.
Here's the tricky part. If price exceeds 1066.25, there is still another alternative labeling (not shown) that would call for an expanded flat correction. Under this scenario, trade would make a new low, then retrace up beyond 1100.75.
In conclusion, we have two scenarios calling for a new low and one that calls trade higher. Tomorrow is Options expiration. Let's see.
Best of Trading
