So, the inverse I pointed out yesterday has not yet popped, but, it’s also not yet failed, either. It attempted to recapture the neckline today (green arrow) and then sold off. That’s not fatal, as the little bull trap might only be temporary. We may simply be developing a larger, more complex “right shoulder.” If this structure does play out, it will help to confirm the bullish count, because, in order to get the full measured move, we will also get the extension we would expect for a wave 3.
However, we also must be mindful of this potential as well. If we do get another rally as expected, but do not explode up, we risk reaching merely “equal legs” between yesterday’s rally and the rally we are in now. And if we only get equal legs, there is an increased risk of forming a giant bear flag (and the measured move of a flag like this here would produce a target of [checks notes] 3955).
And so, we really do want to see this market get pretty well over 4500 to gain confidence in a major low.
Note: When my work is first published on this website, it is made available to patrons who support my work through my Patreon account. Over time (usually after a period of a few months), I make the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page.