This is a brief follow up "grounded" on my last update of the long-term count posted on Sunday (Sep 9).
As a reminder I am "working" with 2 potential scenarios, which can be seen in the 2 following charts that were posted on September 9.
1. Double Zig Zag Option:
2. Triangle Option:
Judging from last week rally, I now give for granted that price at the July low has established an intermediate bottom. Therefore the corrective down leg from the May 2011 lower high at 1.4940 is finished.
But since this down leg is corrective I rule out that a Major bottom is in place hence the longer-term trend from the July 2008 remains down.
This bottom could be either the wave (A) of the second Zig Zag down from the May 2011 top or the wave (D) of the discussed Triangle option.
Therefore price is expected to recover at least a Fibonacci retracement or even more if the long time frame EWP will be the Triangle option.
From the July lows price should unfold a Zig Zag / Double ZZ, therefore after a pullback I expect more upside.
Weekly momentum is clearly suggesting that price should carry out a much larger rebound in the weeks ahead. Weekly stochastic is entering the overbought zone but it can remain overbought longer before a meaningful top can be established.
In the daily momentum we have an extremely overbought RSI, on Friday it closed at 80!!! Here the trend line when/if it is breached it will confirm that price has began a pullback.
In the daily chart below I have labeled a potential count that should be establishing the top of the wave (A) of a potential larger Zig Zag.
We have 4 consecutive eod prints above the Bollinger Band (Another indication that this move is quite extended and a tactical pullback is due).
When this up leg is in place I doubt that we shall see a deep retracement. The 200 d MA = 1.2877 could be retested, but I doubt the we will not see dip buyers if price retest the break out area at 1.2748.
Price has to breach the rising trend line support in order to question the July's reversal.