$EWZ provides us with something of a conflicting picture. On the one hand, we remain in a downward-sloping, bearish channel that dates back to the GFC highs. On the other hand, I am inclined to count everything from the 2016 low as the beginning of a new bullish cycle. After all, the move off the 2008 high has a nice 3-wave structure, and was a terrific retracement in terms of both price and time. Viewing it that way allows us to count everything bullishly, as a nested set of ones and twos first of cycle (yellow) then of primary (pink) and now of intermediate (orange) degrees.
The move off the crash lows can be interpreted as a nice leading diagonal and we’ve come just now right to the 61.8% retracement of the advance from the crash lows (bottom of the little orange box we’re in now). That’s where we would expect to finish the two, with one caveat: it is also common for leading diagonals to correct far more deeply than 61.8%.
So, my basic view on this would tend toward long-term bullishness. However, there is still work to be done, namely, I would like to see a nice impulsive rally coming out of this low, and at some point, it’s absolutely paramount that we exit this channel. I am inclined to think that we will do so eventually.
On smaller time frames, I have little to say, as we’ve only just bounced off the bottom of that little box we’re in. I will try to post something on this again in the future based on the nature of the price action going forward from here.
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