Market Finds Support, Have We Begun The Fifth Wave Up?
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Today, the market moved lower right into the upper end of the support zone that we laid out for the potential green wave (iv) and has moved up sharply off of that low. This is leaving the door open for a local bottom to have been found as part of the larger Ending Diagonal wave structure that has been laid out per the green count. With that being said, we still have some key resistance levels overhead that will need to break before we have confirmation that we are indeed heading to new highs. If the market at any point drops back under today's LOD, it would indicate that we have already topped, at which point a sharp reversal back down toward the 7200-7000 region is still in play.
Overhead resistance currently comes in at the 7410-7445 zone, and we will need to see a break back over that zone to signal that we are heading higher in the green wave (v). Just keep in mind that because we are still likely dealing with an Ending Diagonal pattern, the move up off of the lows should come in a corrective wave structure, making it more difficult to track.
For now, I will continue to monitor the resistance zone overhead and see how we react off of that level. If we see a five-wave move to the downside off of one of those overhead resistance levels, then it would be an early indication that we have begun the next leg down, with confirmation coming with a break under the 7363 low. But again, breaking through that zone would indicate that the market still has higher levels yet to be seen before any significant top is found.
