With all major three indices ending with a doji candlestick and near their 61.8% retracement of the rise from the August lows, the big question now is whether the correction is over or should we expect more downside. Yes the reversal yesterday was a sign of strength but we are still below important resistance levels. Yes the 61.8% retracement is the most important support when it comes to corrective pull backs, but bulls have to be very cautious as this has not confirmed short-term trend change.
The downward move from the all time highs is considered a corrective move. The form of the decline is not impulsive according to my Elliottwave analysis and it most probably is a W-X-Y correction. The only thing left to see is whether we have one more new low before the reversal.
Today I expect the bounce to test the important short-term resistance level of 1961-66. Breaking above the downward sloping blue trend line will be a good strong bullish signal. However there is still a chance that the corrective decline is not over and after a rejection at the trend line we should expect the final leg down to 1915-10.
My longer-term view remains bullish and I expect to see a trend reversal after this corrective move has finished. I will confirm that the correction is over once all three indices break above the resistance levels shown in the charts by the downward sloping trend line. Combined with yesterday’s reversal this will put bulls back in control. For more detailed analysis become a subscriber today.
As always, thank you for taking the time to read my new post.