Daily Analysis

By: TheWaveTrading | Tue, Apr 17, 2012
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As discussed:

I have a bullish bias for the long-term EWP:

In the monthly time frame we can highlight a wide target range = 1328 - 1258


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I have a bearish bias for the short-term EWP:

In the weekly chart below we can see the potential completed Zig Zag off the October 4 low. The loss of the 10 w MA is a strong indication of the trend reversal.


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In addition, on Friday, the weekly RSI has breached the Trend Line Support in force since August.


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In the weekly time frame we can obtain a detailed view of the support areas that can be challenged by the corrective pattern in progress: 1340 - 1328 - 1300/1292 - 1279

It seems that the majority is looking at the 1340 area, then maybe the 20 w MA = 1328 will come into play as an intermediate target while the range 1300 - 1279 could be tested as a final target if price unfolds a large correction.

Regarding the potential EWP, price should unfold one of the following:

Therefore price should be now involved in tracing the first down leg, which I am labeling as wave (A=ABC) that should be aiming at the first target support in the area of 1340-1328.

Even if a move to 1340-1328 could complete a corrective EWP I believe that the odds of a larger retracement are quite substantial, therefore I expect a large rebound followed by at last one more leg down.

3 issues must be taken into account in order to try to be on the right side of the EWP:

Short-term price action:

I am expecting another down leg, a wave (C), off the April 2 peak that should at least match the 64.80 points drop of the first down leg.


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Given the choppy price action of the last two days, keep in mind that a wave (C) has to be impulsive, even though there seems to be selling pressure at the 50 d = 1376.50, it seems that price has not established yet the top of the wave (B). In addition yesterday's Doji fits better as a bottoming candlestick rather then a bearish one.

If price has more business to accomplish before beginning the second leg down we can expect a sideways move shaping a triangle or a zig zag higher that should be capped in the range 1396-1398.

AAPL has confirmed the ending pattern I suggested on April 8. The down side actions looks impulsive, but a fiver is almost completed, hence a wave (2 / B) bounce should be around the corner.


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Monthly Opex next Friday and above all FOMC meeting + Bernanke press briefing next Wednesday could delay the kick off the assumed wave (C) down.

 


 

TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

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

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

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