As expected last week, the Elliot (B) correction wave up turned down already on Monday against the 50 and the 100 days moving average, the upper side of the Bollinger band and the 50% retracement level.
With that move we completed the correction waves C and (B).
In the candle chart we also had a bearish engulfing pattern, confirmed on Tuesday with a big black candle down. Since we expect a price below 1040, we had enough room to open a manual short trade. We opened a trade at 1095.3.
On Thursday there was a selling signal from SATS2. We closed the SATS2 long position at 1073.7.
Unless we get another extension of the up correction, we have completed the (B) correction wave and are on the way of making the wave (C) down, that should bring the index below 1040.
The index finished the long term up move since the price bottom in March 2009 and has started the longer term correction wave. We could hope for a correction wave 2 of a higher degree, followed by a long term wave 3 up move. This looks like a very optimistic long term view, most probably to good to be true!
Another possibility with the wave {5} completed is that the index finished a medium term correction wave {A} up and we expect next the medium term correction wave {B} down, with an index remaining above 650 but most probably higher, in the range 900-850.
But we should not exclude that we have finished a long term correction wave [B] up and that the index will make a long term down move for the wave [C] below the start of the [B] wave or below 650. Wait and see...
I am using a slightly faster SATS2 now on the daily chart. This will give some more entry and exit points, but the advantage is that it will also be faster at the main turning points. We will not trade if it is obvious that we are looking at a "false" SATS2 signal.
Elliott wave count:
Wave {5} up is completed. Since a single impulse wave can not be the end of a correction wave, there is the possibility that we either started a long term up move since the price bottom and we are now making correction wave [2] of a higher degree, followed by a long term wave 3 up move (too good to be true?). OR, another possibility is that the index finished with wave {5} up the long term correction wave [B] and we are making now the long term wave [C] down. Now we had already a correction wave (A) down and (B) up and the index is now in the making of correction wave (C) down.
Pitchfork:
We have a new downward pitchfork. Price did not yet reach the median line.
Fibonacci:
The index retraced to the 50% level and turned down.
Support/Resistance:
There is support at 1040. There is resistance at 1130 and 1180.
Indicators:
Indicators are moving down.
SVE_ARSI (14 periods) indicator:
Moving down.
Slow Stochastic:
Moving down.
SVE_RSI_Swing:
Moving down.
SVAPO:
Moving down.
Volume:
Low volume.
SVE_BB%b_HA (18 periods):
Moving down.
SATS2 Expert:
The SATS2 expert turned red, we closed the SATS2 long position and opened a manual short position.
Hourly chart:
Sylvain Vervoort http://stocata.org/
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