Market Leaves Us Hanging Once Again
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Today we saw the market open lower only to move up into our first key upside pivot level during the morning session. Unfortunately we failed to see a sustained break of that level before the market turned back lower after the lunch hour. This is leaving the door open to several possibilities none of which are what I would consider terribly reliable patterns. This of course, is the nature of corrective wave patterns, which is what we have been dealing with for the past several months. So as we head into the close we are once again left hanging in the lurch waiting on the market to give us a signal as to where we are heading in the days and weeks ahead.
Drilling down to the 3min chart we can see that this move up off of today's low started off nicely as we approached the first micro pivot in the 5673-5702 zone. Unfortunately we failed to see a direct break of this level before moving lower. That failure to break out is now leaving us with several possible paths on this smaller time frame count.
The first path is that we are still indeed dealing with the start of a possible impulsive wave pattern off of the lows that should extend into the 5800-5975 region to fill out the red wave (b). Under that scenario, we should hold over the 5572 low and then break out through the pivot at the 5702 level followed up with a sustained break through the 5742 level.
If we are unable to break those levels but rather move lower, then we will watch to see if we can hold the 5535-5509 level and push higher from there. If we can do that then we still may be dealing with a triangle to fill out the wave (b), which is shown in yellow on the charts. Under this scenario we would expect to see sideways consolidation into at least next week before breaking lower for the larger wave (c) down. Under this scenario, we would need to hold over the 5485 low and under the 5792 high.
If we move lower on five waves and follow that up with a break under the 5485 low then it would open the door for the larger wave (b) to have already topped and this already be in the wave (c) down.
So, while the pattern would certainly look much better with a larger retrace higher before breaking lower until we can actually see some confirmation with a break over the overhead pivot we still have to be cautious in this region as this corrective wave pattern is far from being highly reliable.
