Reasonable To Expect A Pullback Now
By
Avi Gilburt
The market indeed rallied to our next target as expected, but we have now even exceeded that target within this wave v of 3.
But, since I must be able to count to 5 in order to maintain my employment at Elliottwavetrader, I do understand that 4 usually comes after 3. And, with the manner in which we have already extended in this wave 3, I think it is quite reasonable to expect to see a wave 4 pullback quite soon.
Normally, a 4th wave pullback will take us back to the 1.00 extension of waves 1-2. However, when wave 3 extensions, we may even see the 1.236 extension of waves 1-2 act as our support for wave 4. Moreover, we also use the .382 retracement of wave 3 as a standard target expectation for wave 4. In our case, that is around the 5460SPX region, which also aligns with the 1.236 extension. So, that seems to be our reasonable target for wave 4, assuming we top imminently.
This now makes our main region of support the 5430 (the 1.00 extension) up to 5461 (the 1.236 extension). And, as noted above, since 4 comes after 3, I am assuming we will revisit that region in the coming days. Of course, if we should extend a bit higher, then the .382 retracement will rise a bit.
Overall, as long as we hold that support in an a-b-c corrective pullback structure in the coming days, then I am expecting a 5th wave rally to complete the [c] wave. And, if would seem reasonable to assume we can rally up to the 5575-5585SPX region to complete this rally.
At that point in time, things will become very interesting. You see, that can complete an [a][b][c] rally off the recent pullback lows. And, should we see a clear 5-wave decline off the coming highs, then I am going to assume we have struck a b-wave top, and are beginning a c-wave decline, which can be quite sizeable.
However, if all pullbacks from this point forth are all clearly corrective in nature, then I am going to continue to look higher in the alternative wave count presented in blue on the 60-minute chart, which is next pointing us to the 5840SPX region after a larger b-wave pullback.
So, it looks like next week is going to be shaping up as a very important week regarding the near-term direction of the market, and can even have much larger degree ramifications, depending on the nature of the next larger decline.
