Last week I wrote:
"The index made a very small higher high, creating a wave 3.11. I consider 11 up swings as quite extreme. Of course this does not mean that wave 3.11 is finished. I see 1900 still as a possible target with a move towards the upper side of the up moving pitchfork and the R1 pivot resistance. On the other hand, moving down will create a nice double top in the daily chart. while indicators are divergent and in a down move. Who will be winning next week? Bulls or bears? Personally I do expect a lower start of the week".
As expected a lower start of the week and also a lower close of the week. There is a negative divergence between the index and the indicators with room for a further down move. We should expect support from the PP monthly pivot level and the 100 day simple moving average around 1820. If we move below the previous reaction wave 2, we will have a new wave 1, the start of a new 123 down wave. A possible alternative is that we start an up correction move already now, turning down before a new wave 3 is formed. That would have the same effect, a 123 wave down, in first instance to the 100 simple moving average. Remember that a definite downturn, with a lower high, followed by a lower low will probably be the start of a longer term down move.
Sylvain Vervoort http://stocata.org/