Phase 1 in Play!

Well, Phase 1’s in play!

Ray, what are you talking about phase 1?

In yesterday’s blog, “S&P: Up, Down or Rally Around?“, I suggested there’d be a high probability that we’d see an inside day in the four indices. And, so we did …see the chart below.

That’s phase 1. What about phase 2?

First some context.

A move such as we saw on Wednesday tends to V-bottom immediately. By that I mean we see an almost instantaneous rebound. If a V-bottom were to take place, we’d have seen one no later than Thursday.

Instead, we have our double inside-day structure, suggesting two highly probable scenarios. I’ll deal with the most likely here. I expect to see yesterday’s low breached and that will lead to cascading breaches ultimately leading to a breach of Wednesday’s low. Acceptance below Wednesday’s low will mark a move to the lower targets.

For example, in the S&P (CFD).

• Acceptance below 2741 leads to
• Acceptance below 2728 leads to a
• Breach and probable acceptance below 2708.

How to make of the info?

The ideal scenario entry setup:

• Open-Gap (i.e. a gap between the close of yesterday’s day session and open of today’s day session) below 2741.
• A move to close at least 50% of the open-gap with the 9:30 (EST) bar that fails, i.e. the bar does not close 50% of the open-gap.
• The next bar, 10:00 (EST) breaks below the 9:30 lows.

There’s your entry setup. I’ll leave it to you to manage the trade.

Replying to Rob’s request. Ah, Rob, you want all my secrets! Only for you.

In the Ray Wave, the first leg down often stops at the previous wave 4. In this case, that wave saw a retest formation. That structure plus a Fibo projection gave me the target projection

BTW, thanks for the question. It alerted to a typo in the target (now corrected).

The chart below shows the target assessment structure.