The potential bullish set up did not materialize. Wednesday's eod rally was only a 3-wave up leg, which failed once again at the 200dsma.
Bears took the advantage from the failure to achieve an impulse up and despite Wednesday's marginal higher high price deeded below 1243, which was the level that I mentioned that if breached could trigger a meaningful pullback.
If the count that I am following is the correct one the correction is not over yet since price will have to unfold a Zig Zag off Wednesday's eod print. Hence Fibonacci retracements should come into play = 1225-1212-1200
As you already know I am considering 2 EW options:
- Zig Zag = ABC
This option remains valid as long as the structure of the current move, the assumed wave (C), is impulsive.
The extension (1×1) target for the wave (C) is at 1377
If this count is correct price is now involved in tracing the wave (2), which has to bottom in the range = 1226 -1200
Although the loss of the 50 dsma = 1218 could jeopardize this count.
- Triangle wave (B)
This scenario will be strengthened if price loses the 0.618 retracement.
Yesterday's TRIN at 4.97 suggests that we should expect at least a rebound attempt for today.
On the technical front I give priority to the momentum indicators:
- RSI = The loss of the 50 line will be a warning for the ZigZag option
- MACD should not lose the zero line if the EW pattern that began at the October 4 low has more business to the upside
