One of my big points of interest during this bearish drop of doom was $5,750. With the count shown on this chart, if you take the length of waves 0-3 and stack them onto the close of wave 4 it lands at $5,750. Given that wave 5 usually closes between 62% and 100% the length of 0-3, this number meant quite a bit to me. So when things decided to change direction it wasn't a huge surprise.
Once we hit that target, there was some substantial RSI divergence to be seen on almost every time-line. Shortly after that we broke out of our RSI wedge to set up what could very possibly a wave 1 (or an "A"; time will tell). Now we are currently working on the close of wave 2 (or "B"). We have already retraced our wave 1 38.2%, which technically satisfies a potential scenario to signal the start of wave 3. The big reason I believe we will continue to retrace to the 50% of wave 1 is that it appears that 4-hour RSI wants to come down further to its new post-wedge resistance line. You can see that line on the chart. I think that we may have to retrace a little further to set up RSI prior to making a push towards the 1.62 ext of wave one for the close of 3 ($7,000).
Once we hit that target, there was some substantial RSI divergence to be seen on almost every time-line. Shortly after that we broke out of our RSI wedge to set up what could very possibly a wave 1 (or an "A"; time will tell). Now we are currently working on the close of wave 2 (or "B"). We have already retraced our wave 1 38.2%, which technically satisfies a potential scenario to signal the start of wave 3. The big reason I believe we will continue to retrace to the 50% of wave 1 is that it appears that 4-hour RSI wants to come down further to its new post-wedge resistance line. You can see that line on the chart. I think that we may have to retrace a little further to set up RSI prior to making a push towards the 1.62 ext of wave one for the close of 3 ($7,000).
Comment:
Here is a closer look at the potential count for our current impulse. As I mentioned above, we have already hit the 38.2% retracement which could imply lateral movement until we hit the support floor on our 4-hour RSI. If it decides to make a move down fairly quickly, there is also room to hit the 50% retracement before attempting a wave 3 break of the large top-side resistance at $6,420-$6,450.
Comment:
Not much of an update. Still moving laterally as we approach our 4-hour RSI support. It could stay level as we move laterally, retest our 38.2% retracement or make a bigger move to a 50% retracement. Either way, my eyes are on a confirmed close of wave 2. Even if this ends up being just another ABC correction, and instead of moving into a wave 3 it is moving into a "C", there is still money to be made.
Comment:
Coming up on a key moment within the next 3 hours. Keep on eye on a bounce off of RSI support or a break.
Comment:
Well, so far so good. We have one more major resistance trend line that we have to get through to confirm a 5-wave impulse and not just another ABC corrective pattern.
Comment:
Well, you saw what happen when RSI hit our support channel. Exactly as we thought it was enough to break through the $6,450 resistance and get us above our long-term resistance channel. Now we are working on the close of 3.
Comment:
Waiting for 4-hour RSI to to reach critical support.