Daily Analysis

By: TheWaveTrading | Thu, Jan 12, 2012
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I am placing the Ending Diagonal option on a stand-by "mode".

There are no technical reasons behind this decision but I don't want to get ahead of the price.

Don't misinterpret it. I am still a firm believer that the pattern from the October lows is not completed yet but "marrying" the Ending Diagonal scenario would put a constrain on the upside potential of the counter trend EW pattern that price is unfolding from the October 4 low.

The main idea remains the same. It calls for a Zig Zag off the October lows. Therefore price is now involved in tracing the wave (C).

Where I want to remain open minded is on the issue of an impulsive or converging (wedge) wave (C).

So far price is within the limits for a wave (III) of an ED as long as it does not extend above 1310.44

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One of the main reasons behind my sudden "step back" attitude, as I mentioned this weekend, is the out performance of the US Banks:

"A key sector in the SPX is the Financials, and the out performance of the Banks from the November's low in addition to a potential impulsive price structure can alter the conservative target for SPX.

In this respect as long as price does not overlap below 20.08 it is reasonable to consider that price is unfolding the wave (3) of (C) and that price could reach at least the equality target in the area of 22."

At the moment the wave structure of KBE allows a "very" bullish outcome hence we have to wait for the next pullback in order to increase the confidence on the most likely scenario

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I am also monitoring closely the Euroxx 50, which at the moment is badly lagging behind but it does not have any indications of a top pattern in progress.

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Lastly, but clearly is the most important issue here is the EUR which is now in shaky grounds if it is trying to establish the bottom of the assumed wave (A) off the December highs then a wave (B) will need time to be unfolded and higher prices should be expected.

For the immediate time frame price has the opportunity of confirming a Double Bottom reversal pattern if it achieves an eod print above 1.2818

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Author: TheWaveTrading


Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

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