Tuesday, May 10, 2011

New trend down, corrective?

The decline from the top seems to count best as a corrective wave. This can mean 2 things, either the top was a wave X or the top isn't in yet. But after the big decline from the top there are a couple of things that make me believe the top is in. There's a weekly bearish engulfing candlestick pattern after last weeks price action. Such a powerfull decline after a long and slow uptrend usually means a change in sentiment. Also, a lot of indicators were showing divergence. The elliott wave structure shows a possibility for a top, but like always in EW, there's also a possibility for another move higher. For now i have us in a bear market that will last for a couple of weeks/months, eventually taking price below 1.18. If i am correct, price action could look a lot like how it did in 2008, small counterrallies and big, fast declines.



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