Last week I wrote: "Last week I mentioned: "I expect a pullback to the upper side of the BBS band before the start of a second zigzag correction down." Monday started with a move down to the low side of the volatility band and the 50% retrace of the of the last wave up. Ending the week as expected against the resistance of the BBS band. This is a 50% pullback of the downward zigzag. There is now a fair chance that the index starts a second zigzag down. The down target for this is the 100 day average and price support around 2290.However keep in mind that this scenario becomes doubtful if the index moves above 2375. Please read my comments on the weekly chart and monthly chart for more information regarding the longer term view."
Most probably the intermediate up moving correction wave after the first zigzag has finished on Wednesday and the second zigzag down of the double down zigzag has started. Basically we should see a confirmation at the beginning of the week. The first zigzag made a convergent move with lower index prices and lower tops in the Stochastic RSI. So, I expected the up move after the first zigzag to be a correction wave only. Now we see a divergent move with lower tops in the index and higher tops in the Stochastic RSI. This points in the direction of a further down move below the previous low. The second zigzag down target for the coming couple of weeks is around 2300. This is the size of the first zigzag down from the top of the past week (the red arrow line down) and the 61.8% Fibonacci retrace of the last wave up. Please read my comments on the weekly chart and monthly chart for more information regarding the longer term view.
Sylvain Vervoort http://stocata.org/