of the 4th wave in the area of a lessor degree 4th wave with
fibs .382-.500. The BIG SHORT comes at the top of wave II.
If it is a wave II the potential lies in the 1.0800/500 area where
III equals 1 to 1.618 of wave I.
Maybe a small long if B wave shows it's hand in a
clear 3 waves.
My mouth is watering so I'm probably in Big Trouble.
Third wave is impulsive, but inside a third wave there's always the fear of those in the trend that can not believe they hit, hence they pull out, at the same time some others trying to catch the low see a change in the direction (the former taking profits); in the street it is called the infamous "dead cat bounce" in any falling or rising trend, afterwards late arrivers see that as an opportunity and push the prices further in the original trend, usually the end of this third wave is not that far from the dead cat bounce.
The fourth wave, a correction is the famous "Over head supply" or "demand" for the other side which is stopped by those traders that tried to pick a bottom.
In other perspective, a series of "h" setups, the faster is the more certain to be the middle.
I tell you this because many times occurs that say in an uptrend, it is rising, but suddenly something happened and sellers are too anxious and sell at whatever price, hence the price falls rapidly.
But the count for the upside was valid, the issue is that for selling force suddenly stopped the up count and started the count to the downside; this is where many people get lost, they think the wave starts from the peak but this is not a rule of thumb, sometimes it starts in the middle of the range.
By identifying the third wave you can easily trace back all the waves and predict those in the future; moreover, if combine with pivots, and general strength you can get a better timing.
Let's try a neowave plot for the last daily waves.
It helps clear out the noise.
The whole structure is very tricky. I had originally thought we were forming an expanding triangle (EWI would say leading diagonal), but the drop has been too big, and it would be too much time for wave B of it down.
So, verdict, is we are heading down, going back to the big downtrend in the quarterly, which aims pretty low. Even beyond parity.
Reasoning stems from my intermarket analysis: