Ugly Action as Market Sees More Whipsaw

Today, the market opened up slightly, followed by a small dip in the morning session, only to push sharply higher in the afternoon. We are currently trading at the highs of the day and have broken the most immediately bearish path that we had laid out yesterday. This is making the more indirect path lower, as laid out in the yellow count, more likely.

With that being said, I still cannot rule out a more immediate drop from around current levels. However, under that case, I think it would be more likely that any direct move lower would take the form of an Ending Diagonal to the downside. In both scenarios, the action is likely to be a bit sloppy for at least the next few sessions, but we will need to see how the market reacts at resistance, which is not too far overhead, and support below to have a better idea as to the most immediate path the market is likely to take.

Under the new white count, I am counting the current move higher as a wave 2 as part of a larger Ending Diagonal, which should still resolve lower. Under this case, we should ideally hold under the 7431 level. We would need to get back under the 7260 level to give us initial confirmation that this path is indeed in play, with further confirmation coming with a break under the 7225 level.

If we continue to push higher and break the 7431 level, then we are likely following the yellow count, under which case the larger wave (b) would likely take us into next week before any sort of significant top is found. Under that case, overhead resistance comes in at the 7476-7585 level. We would need to see a full five-wave move to the downside off one of these Fibonacci levels to give us initial confirmation that we have indeed put in a top in that yellow wave (b), and then ultimately a break back under the 7225 low to confirm that wave (c) down is underway.

So, for now, we simply have to wait and see how the market reacts at the price resistance and support levels noted above.