The move yesterday from 1323 to 1333 would now appear to have been waves 1, 2, and 3, of an inverted corrective wave from 1323.40. Wave 4 come this morning in the sharp move lower at the open, with the small rise to 1318 completing wave 5, and wave 2 from 1335. The drop to 1311 formed wave 3, the rally to 1318 wave 4, and the day’s final decline to 1311 completed wave 5.
We now have a 5 wave sequence completed from 1292 to 1335, and a 5 wave sequence from 1335 to today’s low of 1311, leaving us again without a clear cut answer as to which way the market will head next. With the completion of a 5 wave sequence today, we would expect a move higher, with an initial target of 1320. Before we can even think about the resumption of a rally, we would need to see a price above yesterday’s 1335 high.
We believe this market still needs to work lower before a rally attempt can occur. A move below 1311, in our opinion, would signal the start of that move lower. We see support at the 1301-1302 level, with resistance at 1327, and 1333.
