1. 12/15/200810:16 PM Pacific
Zooming in on a 60 minute chart of Friday’s move up in the futures that continued into
Sunday, I have a bias for 5 waves up, and 3 waves down today. Note how the move
continued up to the bottom of the original trend line, and then reversed to ultimately find
support at the 2nd Fan line.
The first chart below shows clean ratios for 5 waves up and 3 waves down. The 2nd Fan
line was breached but not broken. Note the intersection of c (1.618 extension of a) and
the 2nd Fan line. On the second chart below you can also see that it was a .500
retracement level that ultimately held on a closing bar basis, at the Fan line.
Ideally, for this count to work we should go up from here. I believe this is the highest
probability. There is one other option at the end of this report.
60 minute wave count and Ratios of Friday’s move up
2. 12/15/200810:16 PM Pacific
Retracement level of today’s move down
Moving the lens back out to the larger timeframe on the chart below, I am looking for any
confluences with the Fibonacci extension pivots since the low, and we really only have
one. It is at the previous high of (1), the 1:1 ratio of Friday’s move up from (2), the
bottom of the original trend line further up the axis, and .618 off the low (2nd time).
There is a very good chance we will pause or retrace here. Ideally, for the larger
Expanded Flat thesis to play out, price will get to 958 without a significant retracement.
If this is going to happen it should be in the next day or two.
What happens if we go lower? I cannot find any probable patterns that go lower than the
11/21 low from here. In my analysis, if we are going to take out the 11/21 low, we have
to go higher first.
If we start off lower tomorrow, the second chart below is the most probable path for
price. The lower price option is interesting because there is a confluence of the 3rd Fan
line, a .618 Fibonacci extension of the move down from (1), a 1:1 ratio of today’s move
down from 1, and, not shown, an .810 retracement down from Sunday’s high of 1.
High probability we will bounce there if we head lower over the short-term, then work
higher.
4. 12/15/200810:16 PM Pacific
TMD/DW
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