Just How Deep Do We Pullback?

With having struck our general target for wave iii of 3, the market is likely in wave iv right now.  And, again, the question is how deep do we pullback.

Normally, I would not expect us to break down below the 2246SPX region, which is the upper portion of our upper support region.  But, there is a possible micro pattern in place, which can take us down as deep as the 2223-2225SPX region.  So, I had to slightly adjust our upper support region down to there.  As long as we remain over this upper support region, the market is likely setting up its next melt-up phase over 2300SPX. 

For now, as long as we remain below yesterday’s high, pressure will remain down.  However, if we take out today’s high, then it is a strong warning to shorts, as we can be headed towards the 2350SPX region next.  Alternatively, a break down below 2220SPX is a warning to the long side of the market, but, for now, that is not my expectation to see below that level.

Avi Gilburt is founder of ElliottWaveTrader.net.