After holding the previous February lows of $5,873.00 I would not consider from an Elliott wave standpoint that this impulsive move is the beginning of a 3rd wave of a larger degree given the depth of the correction since those prior lows. From a pure technical Elliott-wave perspective, no rule set has been violated, as a retracement of 100% of the prior wave is needed to invalidate an impulsive movement, which has not occurred in this instance. Regardless, I believe that the Y-wave, as labeled on my chart was a truncated ending 5th wave that signaled to bulls that a rally was underway and the market began to see more bullish sentiment and the price action positively reflects this premise. Based on taking a Fibonacci retracement of the current entire impulsive structure, the highest statistical probability for an A-B-C retracement is for price to correct to the 0.50 to the 0.618 fib levels ($7,690.00 to $7,402.00). However, given the bullish sentiment of the market a smaller position could be taken at the 0.382 Fibonacci region which is $8,005.00 (this area also provides some key psychological support as $8,000 is a level that bulls would like to maintain, and is a "nice", round number, although it will likely retrace further than this). A stop-loss at $7,255.00, which corresponds to the 0.65 fib region, is a tight stop-loss that should limit over exposure in the market in addition to providing a terrific risk to reward set up. The next target in play after the A-B-C retracement has occurred based on Elliott wave, Fibonacci projections and certain trend analysis indicates an initial target of $8,900 to $9,100 as the next wave 1 will likely attempt to break the previous high. Moreover, the proposed/hypothetical wave 2 ideally, should test the downtrend line, as is shown in the chart. If price bounces off these levels, it is indicative of a bullish market sentiment that will help to provide more evidence for the next target of $10,200 (1 to 1 extension of the larger degree wave 1 from the projected area of the A-B-C retracement—see on chart). Target 3 at the 1.618 fib region is approximately $11,500, which provides an overall risk to reward of 9.23 to 1. In addition, on a logarithmic chart a downtrend line can be drawn from the December highs to the current price that the market has largely respected since this bear market has begun. In order to not get bull trapped, it would be prudent to monitor the price action closely for the next couple of days in particular and analyze how the market is looking in regards to volume, candle stick formations, market sentiment, news, etc. in order to be able to determine if we will break the down trend line and go on to form a new uptrend or if we will heed the trend line and correct to lower levels. As always, stick to your stop-losses, dollar cost average down and do not chase the market as you can always buy into strength. Disclaimer: This is not financial advice.
Short-term: healthy consolidation/bearish
Long-term: bullish
Entry price(s):$7,700 to $7,400
Stop-loss: $7,255
Risk/Reward: 9.23 to 1
Target 1: $8,800
Target 2: $9900-$10,200
Target 3: $11,500
Short-term: healthy consolidation/bearish
Long-term: bullish
Entry price(s):$7,700 to $7,400
Stop-loss: $7,255
Risk/Reward: 9.23 to 1
Target 1: $8,800
Target 2: $9900-$10,200
Target 3: $11,500