Market Will Be Tested Tomorrow

With the market pullback today, we have a completed i-ii, 1-2 in the bullish set up for wave 5 of (v) of (3).  But, with that set up, it means the market is just about out of room to break out to the upside.  In fact, I would need to see a strong confirmation as early as tomorrow, with a potential gap up over the downtrend line on the 60 minute chart.

However, if the market is unable to follow through on this set up, and breaks back below last week’s low, it would suggest to me that the yellow count has increased in probability, and that a b-wave triangle may have been completed with today’s rally off the low, setting up a potential c-wave down to complete the (a) wave of wave (4).  While I would still need an initial 5 wave decline (wave 1 of alt c) to make that a higher likelihood, the inability to follow through to the upside on this set up starts shifting the probabilities towards the potential that wave (3) has topped a bit lower than our ideal expectations.

So, I think tomorrow is going to be an important day for the market to prove that it wants to head higher to complete wave 5 of (v) of (3) towards our longer term target.

1-60minuteSPX
1-60minuteSPX
Avi Gilburt is founder of ElliottWaveTrader.net.