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We may be at the end of and ABC Correction to the loong rise in TBonds.
Or we may have started a 5 wave descent.
Since we started showing a head and Shoulder formation in the last post,
let's look at a 5 wave descent in .gif USM5
My arguments for the 5 wave scenario would be the "Wedge" you see in the
picture. Well, it's not a Wedge in its strictest sence, but the trend lines
supporting the moves since 1/12/98 has formed a wedge like fromation that
contains recent prices.
What usually happens in falling wedges, is that prices break out on the
upside.
However in the not so common instances when prices break out on the wrong
side, we usuall have a violent move.
As you can see in the chart, price has actually closed outside of the
"Wedge", which is not a sign of strength and I would consider it a warning
on things to come.
Please also see Frank Taucher's comment 1998-156 no 3 on "panic selling" at
his free site "trade of the week" at
http://www.supertraderalmanac.com/february_tips.htm.
Now, if we look at the ABC scenario in .gif USMABC (end to correction)
Supporting the ABC scenario is the fact that we have a great many support
projections in the 118.18-118-28 area. the two most important are displayed
in the chart.
118.28 is the 50% retracement of the Y-H rise
118.23 is the 78,6% (Root phi) retracement of the X-H rise. And if this
area is broken, it usually signals a continuation of the (in this case
down-) trend, thus supporting the Head and shoulder case.
Whatever way we turn we will now have failure, with, probably, powerful
moves in either direction.
If support holds ( then the C Bottom was be well above the lower trendline
in the ABC correction trend channel - a sign of strength) then the downturn
from the wedge (and probably the H&S) will fail causing a "failure" rally
(new term, just invented...).
A break down through the 118-28-118-18 area is breaking IMPORTANT support
levels, wich in turn will cause an equally powerful move in the other
direction.
In subertraders Almanac we also find that 3/3/98 is a "Pesavento Point"
the lowest astrological index of the year, usually coinciding with trend
Changes (85% of the time) or acceleration (15% of the time) of prices.
I am finally enclosing a weekly .gif file showing what has happend in
TBonds in the past 10 years when Venus was Sextile (60 degrees to) Mars.
Which is the case today and on sunday.
Regards
Stig
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