Is this the end of wave 1 of the bull run? That is possible, and it fits all of the rules for the Elliot wave theory.
Wave 2 retraced 38.2% of Wave 1 and did not retrace more than Wave 1.
Wave 3 is 2.618% of wave 1, which is a standard extension target. Wave 3 is not the shortest wave.
Wave 4 is an expanded flat correction—retraced 38.% of Wave 3.
Wave 5 is a 1.618 extension of Wave 4. Because Wave 3 is longer than Wave 1, extended wave 5 remains valid per the Elliot wave theory.
How would you play this?
1. Short $SPY using the 1.618 level as a stop loss
or
2. Wait until the price re-enters the rising channel, then enter a short position.
Either way - R/R is hard to pass up on the short side.
My assumption is this is wave 1. Wave 2 common pullback target is 0.50-0.618 of Wave 1. (shaded blue area)
Wave 2 retraced 38.2% of Wave 1 and did not retrace more than Wave 1.
Wave 3 is 2.618% of wave 1, which is a standard extension target. Wave 3 is not the shortest wave.
Wave 4 is an expanded flat correction—retraced 38.% of Wave 3.
Wave 5 is a 1.618 extension of Wave 4. Because Wave 3 is longer than Wave 1, extended wave 5 remains valid per the Elliot wave theory.
How would you play this?
1. Short $SPY using the 1.618 level as a stop loss
or
2. Wait until the price re-enters the rising channel, then enter a short position.
Either way - R/R is hard to pass up on the short side.
My assumption is this is wave 1. Wave 2 common pullback target is 0.50-0.618 of Wave 1. (shaded blue area)