APPROACHING A SHORT-TERM PAUSE
The attempt of a larger pullback has not materialized. (In my last weekend update I was suggesting as a likely scenario that the up leg from the April 18 low was over)
I am aware that the pattern from the April 18 low is corrective; therefore it cannot establish the top of the advance from the November lows, but it is a real mess so it is difficult to have a confident count.
Before analysing this pattern I remind two potential counts for the corrective rally from the November lows:
- Option 1: An Ending Diagonal wave (Y) will complete a Double Zig Zag. If this count is correct then we are now in the wave (I) of the ED.
- Option 2: Price is unfolding the last Zig Zag of a Triple Zig Zag. If this is the good one then we are now in the wave (A)
We also have to keep in mind that regardless the two major risk events that are coming upon us (FOMC on Wednesday and ECB on Thursday), since the McClellan Oscillator is overbought price should be getting close to a short-term pause:
Regarding the labelling of the current up leg, assuming that we are in the second option, I have two potential counts:
- An Ending Diagonal will complete a Zig Zag establishing the wave (A); (Now we are in the wave IV)
- The wave (A) is unfolding a Triple Zig Zag. (Now we are in the wave B of the last ZZ)