A Clear Path from Here - organized whipsaw coming
If looking at this chart at a glance hurts your brain, no worries I will summarize for you below (I need these lines personally to make swing trade decisions but the concept is pretty simple). I am just using "1-5" rather than "I -V" but it is a smaller wave nothing major. Enough to tell us map of near-term price action going into FOMC):
Bearish wave 3 was in at yesterdays low (just slighly over 1.618 of wave 1-2), wave 2 retraced just over 50% of wave . Now we are on wave 4.
- Expected wave 4 target is 422.21 (0.382 of wave 3). Expecting to see this today actually before starting wave 5
*** IF SPY breaks above 427.52 the bearish count is invalidated (> 0.5 of wave 3). Bulls recently saw this happen back in mid April when the downside pressure invalidated their count at attempted wave 4, if you believe in paybacks don't close out all your calls just yet. Probability does not favor this, however)
- Wave 5 could drop to a variable range based on the retracement variability of EWT for wave 5 (I don't make these rules), however, my point estimate is SPY 395.76 (Range 390-400, max extended range 378-411 - you might think that is quite a range but these are the mathematical limits).
Point prediction: 420s today, 390s going into FOMC, start of major rally post-FOMC that will begin larger Wave 5 to mid 500s by end of year (below 350 invalidates a 13-year bullish structure prematurely so I would not bank on that if you respect probability). The initial target after the wave 5 at apprx. 395 confirms larger wave 4 correction is completed will be SPY 440s, of course we will have to update accordingly based on the realized levels traded.
Possible setup that could invalidate wave 4 is a bearish harmonic with D > 427.52. Based on previous FOMC they love to whipsaw and create escape velocity for the ever "unexpected" post-meeting rally, and with this structure they can whipsaw in a very organized manner.
Best to all,
Davy Jones
Bearish wave 3 was in at yesterdays low (just slighly over 1.618 of wave 1-2), wave 2 retraced just over 50% of wave . Now we are on wave 4.
- Expected wave 4 target is 422.21 (0.382 of wave 3). Expecting to see this today actually before starting wave 5
*** IF SPY breaks above 427.52 the bearish count is invalidated (> 0.5 of wave 3). Bulls recently saw this happen back in mid April when the downside pressure invalidated their count at attempted wave 4, if you believe in paybacks don't close out all your calls just yet. Probability does not favor this, however)
- Wave 5 could drop to a variable range based on the retracement variability of EWT for wave 5 (I don't make these rules), however, my point estimate is SPY 395.76 (Range 390-400, max extended range 378-411 - you might think that is quite a range but these are the mathematical limits).
Point prediction: 420s today, 390s going into FOMC, start of major rally post-FOMC that will begin larger Wave 5 to mid 500s by end of year (below 350 invalidates a 13-year bullish structure prematurely so I would not bank on that if you respect probability). The initial target after the wave 5 at apprx. 395 confirms larger wave 4 correction is completed will be SPY 440s, of course we will have to update accordingly based on the realized levels traded.
Possible setup that could invalidate wave 4 is a bearish harmonic with D > 427.52. Based on previous FOMC they love to whipsaw and create escape velocity for the ever "unexpected" post-meeting rally, and with this structure they can whipsaw in a very organized manner.
Best to all,
Davy Jones
Comment:
Was literally perfect until today if you play the "run new bars"... I think next stop is 414-421
Good chances we can mark 418.93 as wave 4, which sets up for wave 5 at around 392.50. As mentioned the FOMC buildup will accelerate this drop so be ready.