The uptrend looks to be resuming, but short term retrace needed
I count a completed 5 waves up last week on the hourly chart. Notice the divergence in momentum between waves 3 and 5. The reversal on Friday provided 3 waves down with lots of overlap, so I'm labeling that an ABC corrective pattern, but the retrace was very shallow. A shallow retrace can happen in a super strong trend, but given recent volatility, I count that as unlikely. Instead, I'm looking for a .50 to .618 retrace. I've identified 2 patterns as equal high probability. The expanded flat takes the market to one more new high before retracing, the double zigzag correction continues the retrace down to the 618 area. Both ultimately land in the same spot regardless.
From my perspective, it's too much of a crapshoot to play the short term correction, but should the market make it to the retrace target, playing long might be a better risk/reward. A stop can be placed at the prior low at the 198 area, since a trade below that level would invalidate this thesis.
From my perspective, it's too much of a crapshoot to play the short term correction, but should the market make it to the retrace target, playing long might be a better risk/reward. A stop can be placed at the prior low at the 198 area, since a trade below that level would invalidate this thesis.
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