Market Moves Into The Retrace Zone And Still Over Support
By
Today we saw the market open up flat again followed by a slow grind higher leaving us sitting inside the retrace zone from the itnial move down off of the highs. So with that and as we have yet to break last week's low and we are still sitting over even the upper support zone we still do not have confirmation of a top in place just yet.
The pattern does however remain full and I still remain quite cautious in this region but until we actually see a break of support and/or a full five down I have to still allow for the possibility to see another higher high as an alternate count. Once we do break support we can further lay out the near-term downside targets but for now and until we see a break of upper support no confirmation of a top is in place just yet.
Drilling down to the five-minute chart the primary count is that we have topped and that the move down off of last week's high was a wave i. I have the micro retrace zone for this potential wave i comes in at the 5485-5506 zone which represents the 50%-76.4% retrace of this initial move down off of the highs. As long as we can hold this zone and turn lower then the wave ii retrace on the smaller timeframes will remain intact. We will however need to beak back under the 5447 level then we will have initial confirmation that a local top is indeed in place. If we can break that level then upper support still comes in at the 5406-5365 zone below and moving through that zone would give us further confirmation that a larger degree top has been struck.
If we are unable to break down below support but rather turn back higher on five waves then it would leave the door open to see another higher high before a larger degree top is in place. At that point, I would watch the 5553 level as the next key overhead fib/target zone to reach.
As II noted yesterday the pattern remains quite full but we still do not have confirmation that a top is indeed in place just yet. Once we do see that confirmation we will have plenty of time to trade the short side of this market but for now and until that does occur further sloppy action in the very near term may indeed be the name of the game.
