Important UVXY update.

Here is the back link to my previous UVXY post.  The title of that post was "entering potential danger zone."   If you look at the bottom chart (the 3 minute one) from that post you will see that I modeled wave 5 up to $32.50.  It in fact peaked at $32.27.  I'm happy with that.  Now, after 5 waves up we expect a big pullback to either the level of the prior 4th, the 38.2 fib, the 50 fib or the 61.8 fib.

So check out what actually happened below.  The rising wedge was, of course the 3rd wave (blue 3).  I'm going to start referring to that as "W3C" for "wedges are 3rds or Cs).  It just sounds cooler than "cap'n's folly".  Joking aside, that is turning out to be a very powerful indicator.  In any case, then we got an expanding wedge 5th wave which peaked into the top rail bump.  That was green 1.

The retracement has now hit the lower rail and also the 50 fib.  I would normally expect a throw under here and so the 61.8 is still possible but after that we should power up into green 3.  A higher high than green 1 is our best confirmation that this count is correct but a first confirmation would be a move back up above the 38.2 line.  If we move up again tomorrow, just set your stops for just below today's close.  If we move down from the open then you might want to see if it holds the 61.8 before deciding anything but lower than the 61.8 begins to become worrisome for me.  Of course, this would be wave 2 down so a deep vee should not be unexpected.

Bottom line: for now this looks like a normal and healthy retracement, not something more bearish.  A gap up tomorrow would also cinch the bull model for UVXY.  You have been patient with this bad boy, time to get paid.  But keep using stops for now so you don't get played.  Mine are at $23.