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Sunday, June 14, 2009

Intermediate A or Primary 2?

Please refer to the chart above.

The Primary wave from 2007 to March 2009 has often been called (Primary A). According to Robert Prechter and others this is actually (Primary 1) of (Cycle C). I too have decided to refer to these Primary waves as 1 and 2 rather than A and B.

This chart is a view of recent activity and the next chart covers the wave up to the beginning of the top chart. You can use wave W as a connecting reference.

(Cycle C) will have five Primary waves, and we have either finished (Primary 2) or (Intermediate A) of (Primary 2).

So that's the big question. Is this the end of (Primary wave 2) or the end of (Intermediate wave A)?

Rich presented a very detailed case for this being (Intermediate Wave A) and I have renumbered these charts accordingly. There are several ways of counting this wave that all end up with this being the peak. It helps to have the correct count in order to determine the future count, but since this is the peak of a correction it may not be as important as an impulse count.

According to the rules and guidelines for wave 2 corrections this wave has met the minimum criteria.

It was a series of Zigzags which are most common for wave 2 corrections, and it has taken more than 10% of the time of Primary 1 , and it has retraced to end of previous (Intermediate Wave 4) of (Primary 1).

But wave 2 corrections generally retrace at least 30% of wave 1, and it has just barely met that. More often wave 2 will retrace 50% to 61.8%. So it seems to be coming up short even though it has traveled further than waves 2 of 1, 4 of 1, 2 of 3 and 4 of 3.

It's hard to say which count is correct right now, but after the market breaks 876 we will have to be cautious, and expect an (Intermediate C) wave. Since erring on the side of caution is best I'm going to stay with this count.

One characteristic that leads me to believe this is a peak, (Either P2 or Intermediate A), is the way the market has slowed. Bottoms tend to reverse on sharp sell off due to the optimistic psychology we hold to as humans, whereas peaks tend to slow, and then fall abruptly out of fear.
Key levels are (935 to 923), 912, 876

Analysis presented on this Blog has only informational and educational purpose and does not represent a proposal for buying or selling currency contracts.

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