In my last post on $BABA, I suggested that it may be putting in a low of very great significance. I will list my reasonings for that, based on the structure, and I will take a moment to explain those reasons, and add a quick note on the most local structure. (A member has asked for some updates, and I was going to soon anyways so this is perfect.)
- When we took out what I have labeled as primary (pink) 3, that was the decisive piece of evidence informing us that the prior structure had completed—in other words, it made it less probable for what I have labelled as pink 5 to subdivide into a new five-wave structure and extend back to all-time-highs.
- And then an examination of the structure from 2015 on revealed three peaks, so a 5-wave structure in itself, which is just what we would hope to see.
- And so, we would then expect a 3-wave correction of some kind, and we’re getting that so far (I’ve labelled those pink A-B-C).
- The next step is to ask: how deep are we going to go?, and since this must be a two, we should look to the 50-61.8% retracement of the move from the all-time low to the all-time high (the two arrows). And since we’re near there, this is about where we would expect a reaction higher.
- Now, we’ve gone deep enough in price to satisfy the conditions for a correction of this degree, but we do not yet know if we have also corrected enough in time.
- How we should try to know that is based on the nature of the next move: we should move in the direction of the orange box above, and if we do so in a 3-wave structure, we may expect a second decline taking out this low and taking more time, or if we move there in five waves, we may conclude that the low is in. In either case, we still should proceed up in price for a while.
Twice now, $BABA has found support at the 61.8% retracement area of its entire run from inception. An excellent candidate for a 2 of cycle degree. We don’t get to see those very often. My initial target for intermediate 1 is noted.