Market Continues To Push Lower, But Structure Is Far From Clean
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Today we saw the market continue to push lower after moving lower yesterday as well. Unfortunately, the structure of the move to the downside is far from clear, and if we have indeed topped in all of wave (b), the initial move down has likely taken the form of a leading diagonal. While this can certainly qualify as an initial five-wave move to the downside, this structure is not the most reliable of patterns.
The move up off today's low is, however, taking the form of three waves, which provides us with a bit of support for the idea that we still have further downside action ahead of us before making any new highs. However, I would still want to see a full five-wave move down of one larger degree to provide better confirmation that the wave (b) top may indeed be in place.
Today we tested the lower end of the support zone that I had been watching over the past several days but did not see a sustained break of that level. With that, the door remains open to seeing another higher high from today's low. With that said, given that we have three waves up off the lows, I am leaning toward today's move being an initiation move and the market still pushing lower before moving higher.
Under this case, micro resistance comes in at the 7568-7634 zone. As long as we remain under this zone, I will be looking for the market to make at least another lower low beneath today's low. If and when that occurs, we can lay out the downside pivots and support levels and see if this can indeed give us a five-wave move of one larger degree, thus confirming that we have topped in wave (b).
If we move back over that resistance zone, then it opens the door for the market to still see a higher high. Under that case, it would make the yellow count more probable, but that would still need to be confirmed with a corrective move lower in the weeks ahead.
For now, I will continue to monitor the overhead resistance levels and see how the market reacts at those levels. If and when we do push lower, I will also be watching how the market follows through to the downside and whether we can indeed get a full five-wave move down.
