This idea is based on the Elliott Wave Theory - involving the use of ending diagonal pattern. An ending diagonal suggests an end to the ongoing trend (in short-medium term). It involves 5 sub-waves and is mostly broken downwards (or upwards) with a heavy momentum. Overall the market seems to be completing its 5 waves structure too (wave count mentioned in brackets). This calls for a correction where the market retraces back to a previous support level. The Monthly RSI has also moved downwards while the price made a higher wave (inside the diagonal) - this is considered a confirming indicator for an ending diagonal pattern.
However, the idea is derived after ignoring some 'noise' on the chart (wicks). The price is also showing a breakout upward, which could right now be considered a 'false' one. Closing of the price inside the structure is what's important.
Most technical analysis would point to a bullish scenario at this point as the market has been soaring for the past few months. So this is clearly a biased analysis which first assumes that the market needs to be in a correction now.
Any investment or trading based on this needs to be managed properly with appropriate risk/money management.
However, the idea is derived after ignoring some 'noise' on the chart (wicks). The price is also showing a breakout upward, which could right now be considered a 'false' one. Closing of the price inside the structure is what's important.
Most technical analysis would point to a bullish scenario at this point as the market has been soaring for the past few months. So this is clearly a biased analysis which first assumes that the market needs to be in a correction now.
Any investment or trading based on this needs to be managed properly with appropriate risk/money management.
