In the last column, we discussed the multiple reasons to believe that the $760 area looked attractive as a buy. I urged anyone still short there to close their short positions. However, I cautioned that I was not yet ready to buy the chart, as it still felt like the correction had more to go both in terms of time and price.
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It turned out that there was indeed a significant trading opportunity there. A decent jump for those able to get in and out at the right times. Here is a 2 hour chart:
We can see that the 1×2 Gann angle stopped the advance at the blue arrow. This precipitated a dramatic fall to $757. Price reversed exactly at the end of the 1st square, in time, at the red arrow. (End of squares often have such an effect on a chart.) There have been some large swings since then, with the top of the 2nd square stopping price on 2 occasions. As I am typing, top-of-square resistance is being tested again (yellow highlight).
So what’s next?
To state the conclusion first, I am still not convinced the correction is over. From an Elliott Wave perspective, I cannot see 5 waves up in that recent advance from $757 to $840. Can you? If not, then this bump is a corrective wave, not the start of a new advance.
But there is more than just that. Looking again at the chart above, price reversed at the end of the square, but not at a geometric position such as the top of a square or an arc. Price obliterated the 3rd arc pair, but did not test either the 4th arc, or the top of the next square. I cannot help but feel that pricetime will likely test the 4th arcs, and probably the 5th arcs as well, before this is finished. The green arrow identifies a possible target in the $700 area.
We will see…
Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.
Image from Shutterstock.