Chart 1 - From the rebound high (blue (1)) or a potential orthodox high (grey (A)), we have a three-wave deep retrace so far and a retest of the May low in SPX.
Chart 2 -
If the May low survives, the retest is likely (blue) B/2 of a potential wave five of Chart 3.
If the May low is breached, it is consistent with the bull-trap scenario discussed 2 weeks ago, as either the final zigzag of a contracting LDT (red C and more bearish for the rest of the year) or the final green C of a double zigzag from the ATH and a potential wave four of Chart 3.
Chart 3 - long term structure
Chart 2 -
ReplyDeleteThe reason I think your count is out is because there are distorted waves there (on micro & intermediate deg scale ) which you havent taken into account.
From the blue X, I see there 5 waves down to the low around 16 May. There are clearly 3 downward sections there in that segment.
The problem with your blue B wave in that seq is that that the shape of that wave (a-b-c) with a lower b than a (and very deep below the a) does not fit the the rules and the usual observations.
So that wave cluster is unlikely to be a B wave.
I will comment on this later.