] and, together with seasonality, suggests the next leg lower to ideally $15900+/-500, is underway, contingent on holding below the warning levels for the Bears outlined in this article” , and the market stopped following the average seasonal path. Moreover, the index is now trading at around $18710. So, let's review how we have forecasted the NDX over the past month to understand better how the EWP works, how our forecasting works, and how to apply it.
The market responded to the FED announcement with three waves back up -the expected bounce- and another five waves lower to complete the green W-b as a 5-3-5. Thus, at that stage, it continued to follow our expectations, as a 1, 2, i setup, and that is why we preferred lower prices, contingent on holding at least below the FED bounce high.
Just as before, we cannot know beforehand if the green W-c will extend or not, just as we cannot know beforehand if the red W-b will be regular . We need to see breakdowns below the warning levels we outline daily to our premium members to know if we will get an extension or if c=a is all she will write. Thus, in this case, there's no reason to short until the warning levels are broken.
As you can see, once the W-a was completed, we knew we would get a counter-trend rally. We start with a common 50-76.40% retracement. When that target zone is reached in a three-wave fashion, it suggests the counter-trend rally is already over. However, we know counter-trend rallies can always extend like any other move. When that extension announces itself by a break higher, we will look for the next logical Fib-extensions and confluences .
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