Precisely! If it were so easy, everyone would be doing it!

Cheers

Thanks for reading!

Andrew,

Thank you for sharing – I’ll try to draw in these possibilities or provide some text from Prechter’s book in an upcoming post.

I always appreciate your feedback!

Exactly, though the market has already broken certain levels of short-term Fibonacci confluence at 805. I would look to the February highs at 875 to be simple resistance which, if broken, could lead to a quick push to the January highs at 940.

I’ve decided the bulls have forgotten the meaning of the word ‘resistance.’

It depends if one quantifies this as a Leading or Ending diagonal. Check out Andrew’s comment on here for a background on the pattern.

Diagonals generally are expected to have a similar expectation to a rising wedge – it’s bearish and we would expect a break-down once the lower trendline was violated.

You hit my philosophy exactly – patterns are not magic. They ‘work’ many times because people see them and react to them, placing stops at predictable locations and entering trades at predictable locations. We don’t know exactly what’s going to happen, but the pattern, along with expectations of investor/trader behavior, help us quantify risk and establish larger targets than our stops, which builds our edge.

Nothing magical – just odds & probabilities.

Could be right – it’s been difficult to count the waves in this move up so far – it was counting so easy until we broke the 805 highs. Breaking there triggered a few of my alternate counts.

The pattern will certainly be clear in hindsight but we have to do the best with the data we have now.

You’re right on – we see a volume divergence, a 3/10 Momentum Osc. divergence, overhead resistance, etc but the bulls refuse to cede ground. Friday could be a powerful day either way and – if earnings surprise one way or the other big – then we could see a breakout up or down from the wedge.

I have no possible way of predicting earnings, but wouldn’t that be nice?!

That’s my guess too at the moment but there could be something else going on.