The Battle Rages On

Last week, as we were hitting the lows on Friday, I suggested to those who are more aggressive in their positioning that it would be a good opportunity to try a long trade, as the risk is clearly defined and there are opportunities to extricate yourself from the trade even if we see the 1-2 play out.   And, yesterday, I suggested to those who were more risk averse to allow the two sides to battle it out in this region and you can always then take the side of the victor.

Today, the market slightly spike over the .382 retracement, and it is now challenging it again.  But, there is no clear victor just yet.  Remember, even if we do break out over the .382 retracement, moving into the region between the .382-.500 retracements is more like a no-man’s zone, where it can still be either scenario.  An impulsive move through the .500 retracement would make it much more likely that we are dealing with the blue count, and rallying in wave 1 of the c-wave.   

Of course, there is an alternative that the b-wave is still ongoing, but for now, I am keeping that on the backburner, and trying to keep this as simple as possible.  Even if we do go through a more protracted and complicated b-wave, it still means that a rally through the .500 retracement makes the blue count more likely.

Again, if this is the blue count, then the c-wave should be a standard 5-wave structure.   And, if we rally through the .500 retracement strongly, then I am going to assume we are in the 3^rd wave of wave 1 of that c-wave, which is now notated on the 5-minute chart.  Should we see that take shape, then it will likely provide us with a buying opportunity during a wave 2 pullback.   

So, as the battle rages on in this region, I am going to assume a victor will likely emerge during this week.  And, we can then join the winning team.