with Anthony, ZigZag & Platy
It looks like we are at a critical point in this rally. The market has attempted and failed twice to penetrate the downward sloping technical resistance level and also the downward sloping Andrews Pitchfork. It is key that if we are to break higher that we push solidly through this level of resistance otherwise there is a good chance that we push down to the 1300 level making a higher low before resuming and testing this level for the 3rd time.
This is not ideal for my long position but like i said yesterday this rally needs to prove itself. If this situation does eventuate my entry was decent enough that i can hold and will likely add a little more near a retest of 23 May low.
I believe the key for today is 1318 area on the $SPX, if we stay above this level then we are setting ourselves up for a spring loaded breakthrough of key overhead resistance, if we fail at this level i think that we will see that retest low.
Yesterday in the comments section i said that i would provide the wave structure of the current market.
This has been split into 3 charts, major wave, minor wave and mini waves.
The major waves are indicative that we are still looking for that elusive wave 4 low before we head up into major wave 5.
The minor waves are indicating that we should at some point move up into minor wave 4 before heading down into minor wave 5 completing major wave 4. The next excellent buying opportunity for the medium term.
The mini waves are indicating that mini wave 5 should now be complete, completing a minor wave 3. Hence why i do not expect a breach of Wednesdays low.
Also i would expect a break higher than mini wave 4 to post the new mini wave 1 high in the sequence of mini waves up.
So my preference would be for a breakout today then possibly retest of support (now resistance) early next week before rebounding to a high and completion of minor wave 4 around the end of May as highlighted in yesterdays cyclical progression chart.
In addition it is my belief that the minor wave 4 is going to present a very good opportunity to go short, the level which we will reach into late May was initially targeted as 1370-1375 however this may need to be revisited in the coming days should the bounce to the upside be shallower than expected. I am confident however that we will not reach the 50dma as this would incite selling by retail players something that professionals are keen to avoid as it would involve having to raise prices even further to unload inventory and go short. 1370-1375 would meet this criteria of being lower than the 50dma.
The next week is going to be very interesting and it is best to be patient rather than reactive to the increasing volatility.