Across the board we have seen several stocks and index's lose important support levels at the end of 2018 after a big run up of 60% over the last 3 years (bottom of wave 4).
For an example here on the SP index: Wave 3 hit just over a 1 to 1 Fibonacci extension before Wave 4 came down in an ABC. Sub wave 3 of the overall 5 then hits a 1.618 Fibonacci extension exactly, subwave Wave 4 then sees a small zig zag ABC correction before finally the 5th subwave moves up to form the overall 5th Wave with massive bearish divergences across all indicators, specifically in my preferred indicator the RSI. Once we saw Wave 5 form just above the 1.618 Fibonacci extension with the bearish divergences it was a good RR short, to play this down for an ABC correction overall to important support levels (we lost the first support last week)
Highlighted on my chart is how I'm trading this index with stops above Wave 5. I'm trading still the wave B which currently saw a lovely old support flip into resistance and then C downwards to a 1 extension of Wave A in the form of a zig zag. I will then zoom out to count and see if this ABC on a smaller scale is still forming 5 waves within a bigger Wave A, this is something which will require a few more months of data and sentiment check.
Overall targets remain top of Wave 3 (and the support 3% above it), 0.382 and even the 0.5 Fibonacci retracement. It must be noted though these are extremely bearish targets that may take years to hit and of course i understand the repercussions of such an event.
For an example here on the SP index: Wave 3 hit just over a 1 to 1 Fibonacci extension before Wave 4 came down in an ABC. Sub wave 3 of the overall 5 then hits a 1.618 Fibonacci extension exactly, subwave Wave 4 then sees a small zig zag ABC correction before finally the 5th subwave moves up to form the overall 5th Wave with massive bearish divergences across all indicators, specifically in my preferred indicator the RSI. Once we saw Wave 5 form just above the 1.618 Fibonacci extension with the bearish divergences it was a good RR short, to play this down for an ABC correction overall to important support levels (we lost the first support last week)
Highlighted on my chart is how I'm trading this index with stops above Wave 5. I'm trading still the wave B which currently saw a lovely old support flip into resistance and then C downwards to a 1 extension of Wave A in the form of a zig zag. I will then zoom out to count and see if this ABC on a smaller scale is still forming 5 waves within a bigger Wave A, this is something which will require a few more months of data and sentiment check.
Overall targets remain top of Wave 3 (and the support 3% above it), 0.382 and even the 0.5 Fibonacci retracement. It must be noted though these are extremely bearish targets that may take years to hit and of course i understand the repercussions of such an event.