Wednesday, May 26, 2010

Diverging RSI

Often, when there are conflicting elliott wave counts that are both likely, additional indicators such as RSI can help push the probability of one as "most likely" into the spotlight.

Today is one such instance.

Yesterday's chart has two potential counts listed.

Thanks to diverging RSI while the Euro hit a new short term price low, I now have more confidence that the count listed today is squarely in the top spot. It is not that the alternate is not possible (it still is), it is simply that the primary is so much more likely.

Since we did not yet hit a new low and so far, the late afternoon rebound appears to be in 3 wave form, look to a new low after perhaps more consolidation up towards 1.24 (or maybe even higher) over the next few hours to a day in a wave 2 move. The alternate mentioned yesterday also has us rallying short term... a little higher though above 1.2675 to complete wave c of wave (iv) in a flat before the next bearish wave begins.
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