First, I've flipped over into "end game" mode. By that, I mean that I expect every tricky triangly whiplashly thing possible. The bull is wounded but not dead. It has resulted in confused markets as the bull wobbles around. But the EW rules still apply. It just takes a different slant on what to choose as the top model. TVIX also has a few very interesting aspect which played a big part in the decisions so check out the high level chart below.
All of the history of a chart has to be considered. This chart has been doing 3 wave moves for some time now which is indicative of internal triangle moves. But back at the start of April there was a major break down and then a back test from below (left most blue circle) that failed at the confluence of two major resistance lines. It got smacked down to a higher low (inclining double bottom) and then on the way back up it again paused at that resistance (blue circle second from left). The it peaked at what I have labeled as wave 3 below. Importantly IMO, those peaks point higher and higher and higher. While not part of EW rules and not part of any other TA I ever studied, I have observed that these peaks are often an arrow pointing to an eventual higher high. Even if they peak and then crash like TVIX did into what I labeled wave 4, that pointer is still valid and it increases the confidence that wave will eventually go higher.
Another point is that from the recent bottom @$6.30 I see 3 waves up into 1. Then 3 waves down into 2. Then 3 waves into 3 where that long, nearly horizontal support/resistance pivot line that began back in January seems to have been the divider between the A and the C wave. Then the same thing back down into today's close, also looking much more like a 3 wave move than a 5 wave move. The reason I waited until the close today is so that 5 of C could play out and it certainly did there at the end.
Zooming in to just show the month of April, here is more detail on how I think it could play out. In order of likelihood that I think they will occur:
- Blue
- Red
- Green
If instead it takes the blue path then I will probably sell speculatively and take the profits at the center line. If it subsequently breaks out past the centerline I can always buy back in.
The green strategy is least likely but I will know that it has been chosen if the center line is broken out by a 3rd wave. In this case, I will be looking for significant resistance at $7.70 - $7.80. That would form a declining double top that would predict lower prices. However, if it breaks to a new high ($7.87 or more), expect it to go all the way to the top of the up-sloping orange line and then throw over before coming back down.
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