Click on Chart to Enlarge
The daily chart on the Russell 2000 shows a possible completed upwards abc pattern that has retraced 50% of the April-June decline. This looks very nice from a traditional Elliott Wave perspective, and potentially sets up a wave 3 or C down that has just begun. This would imply a major decline over the coming weeks. Notice the daily stochastics has crossed down from overbought territory marking a potential short entry signal with a stop above this week's high. The only problem at this point is that the hourly stochastics is oversold as of the close. It would be ideal to see it recycle back up to overbought after a mild consolidation into next week before a short entry. Those ideal set-ups don't always come, and given the wave pattern, the risk to reward is still solid using just the daily chart signal.
Click on Chart to Enlarge
This chart shows that break of the rising wedge type formation I had noted. This is a different system of pattern labeling based off of price logic. Again this would imply either a large continuation down, or a couple days rebound after last week's lows are taken out, and then a likely major price break down.
In any case, I had expected a 2-4 week rebound and we are on week 3 this week. The daily chart price touched the upper bollinger band as well. So this would be a nearly ideal time for a top to occur, though some further upside to next week would be nice as well if it created some stronger technical divergence.
No comments:
Post a Comment