A quick update .... From our EW analysis we've been expecting a bottom to form on the Dow followed by a major rally. The action today certainly looks like an impulsive wave 1 up. The sell off at the end of the day looks like a wave 2 correction before a substantial wave 3 rally gets started. With CCI looking so oversold at the end of the day I've taken a small long position but wave 2 could still go down to near the start of wave 1 which is down at about 12025 on the Dow. I've drawn in green the "perfect" correction to generate a buy signal which would involve a triangle half way down to form the "B" in an "ABC" correction.
This chart shows what I think was the bottom on the Dow with a corrective triple before todays rally. I've overlaid an example of a triple onto the chart:
As you can see the action is very messy but it seems to fit quite well. Corrections are notoriously difficult to interpret. Let's see what tomorrow brings!
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