Market Still Waiting To Make A Decision
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Today we saw the market move sharply lower after retracing higher yesterday. We failed to break the previous lows however and move higher into the afternoon session. Unfortunately, the price action both down off of the overnight high and off of today's low of the day is far from clear which is leaving the door open for this to still see a push a bit higher before any sort of significant breakdown is seen. With that being said should we see the market break down under today's low then it would be an initial warning signal that we have begun the larger break lower. The price action on the RTY is a bit cleaner on the smaller timeframes and this chart is a bit more suggestive that we will indeed push a bit higher before breaking down but again should we see a break of the low that was struck today it would be an early warning sign that we have already put in a more significant top.
Drilling down to the smaller timeframe charts my base case is that we are in a wave c of (b) as shown in green. The overhead resistance zone for this wave c comes in at the 5940-5999 region. Again I do not have the cleanest pattern for the move up off of the low of the day so we may be working on either an Ending Diangal pattern or even a more complex corrective pattern to the upside. In either case, however, as long as we remain under the 5940-5999 region I will still be looking lower over the weeks ahead.
We still will need to see a break back under the 5853 low to further confirm that we have indeed put in a top in all of the green wave (b) and bigger picture initial confirmation of a larger top comes with a break under the 5560 level.
So while the market has not yet seen a larger break lower all of the price action to the upside remains corrective in nature and unless this is able to push through overhead resistance the risk to the downside still remains quite strong. Based on the patterns that are being presented on the charts we should however likely have a resolution in the not-too-distant future.
