Rising support has failed as the market took another dive afterhours and this morning. With the move up from the lows being 311 points and the move down currently around 190 points we've done a little over the 61.8% Fibonacci Level but still within a normal amount for what should be a wave 2 of some degree.
The wave 1 up is of course the 311 points from the 3639 low to the 3950, so if this holds then we should start the wave 3 up next. Again, it's hard too know exactly where the wave 2 down was going to stop and turn but it should be close now as the RSI on the 6 hour chart has fallen to 41 now. Yes, it could fall more, as it reached a low of 16 at the 3750 low on 6/13, then made a higher low of 27 on 6/17 with a lower low in the market at 3639.
That's a positive divergence, which is likely why we did the rally back up to 3950, and assuming we turn back up soon and make another higher low with the RSI we could mark a bottom that could last for weeks to months.
This is possible if the market also makes a higher low and so far the 3760 level is holding. The inverted head and shoulders pattern is still looking good as this pullback is the right shoulder of it.
Bulls need to step it up here if they are going try something as they have all the ducks lined up in a row for a strong rally. You have the wave 3 setup with Elliotwave, the positive divergence on the RSI, and the inverted head and shoulders pattern.... and a normal pullback range with Fibonacci. So not much has changed since yesterdays post... setup wise. Obviously we dropped lower to another support zone, but this is still looking good for the bulls.
The tricky part was (again) that I missed the top call of 4050+ as it only hit 3950 and then did this nice pullback. I was looking for 4050+ and this pullback next week, but only to 3800... instead it came early at from a lower price. So next week should not be a "fall off a cliff" move that "move" has already happened now.
For the wave 3 up the calculations are the same as yesterday, meaning if 3 just equals 1 then we should go up 311 point from the low today, an if it is 1.618% then it should go up 511 points. Either one will take the market up to well over 4000 and as high as the 4200's. Today is not a time to get bearish, that's for certain. So if all goes well we will rally up today, tomorrow and next Tuesday (closed on Monday for the 4th of July). We shall see. Have a blessed day.