by Avi Gilburt, ElliottWaveTrader.net
Thursday August 15th 2013
Today's sharp decline came straight into our critical support level of 1655. With the technical damage done, and the way the current pattern looks, I have to heavily favor the red count at this time. That means there is a good chance we are on our way to sub 1600 in the near-term. However, it is unlikely to happen in a straight line. The ideal path, as labeled in red on this chart, places us either in a wave iv of 3 bounce, that should maintain below 1670, or possibly still completing wave iii of 3. Wave v of 3 should target between 1650 - 1644 before seeing a larger wave 4 bounce back above 1660. From there, a final 5th wave down below 1640 would complete a full 5 waves off the 8/5 high, and confirm that sub 1600 and even possibly low 1500s will be seen. The corrective bounce after 5 waves down can take us back to the 1670 region, setting up a wave 3 or C down, which we will be looking to short.
Although a new high from here is becoming increasingly unlikely, it is still a possibility. A break of 1670 would need to be seen first as an initial signal that scenario is playing out, and above 1680 would confirm.
Copyright © 2011-2015 ElliottWaveTrader.net. an AdviceTrade publication. All rights reserved. Any publication, distribution, retransmission or reproduction of information or data contained on this Web site without written consent from ElliottWaveTrader.net is prohibited.