Typically moves in 3-3-3-3-3.
Currently we are in the last smaller motive higher of the 3. It looks like a throw over pattern as price broke upwards of the diagonal.
Currently pending short as we wait for the last C movement to exhaust. (Wait for a candle).
Entering 1/2 position short at 6250.
Wave 1 = 5896 - 5351 = 545
Wave 3 = 6010 - 5587 = 423
Wave 5 thus cannot exceed 423 points. - 5849 + 423 = 6272 points.
Our Stop loss will be set at 1.5% above 6272 to cater for volatility and slight errors in accuracy. Stop Loss will be set at 6370.
We should see a steep sell off in the next few days/weeks as price action accelerate downwards. Base on an ending diagonal, prices should swiftly retrace one degree more than the start of the pattern.
Enter my remaining 1/2 short at yesterday's close of 6248.
I'm using futures to minimize carry cost
Since wave 3 can't be the shortest wave. I'm abit jittery about what is being played out. (Currently it looks like wave 3 is the shortest). Some other patterns could be at play. Nevertheless, since we have set our SL at 6370, we will see how it plays out.
I've went back to look at the chart and ruled that it cannot be an impulse, as wave 4 would have crossed into the territory of wave 1 (This is typical of identifying a diagonal as well).
I'm still quite peeved by the fact that wave 3 looks like the shortest wave. One explanation I could possibly get is to calculate is base on % terms instead of the absolute increase in points. This would stretch the current wave 5 to the maximum of the top put in on 7Nov, roughly an 8% increase in my calculations
If the selling continues, we might get a bearish extinguishing on the daily. But let's not get too excited yet. Need for a close below 6300 level for today's candle.
I think some other pattern might be in play.
Bears might be running out of time as stock markets tend to drift up slowly during the slow holiday seasons (like during the Thanksgiving week and Xmas week). I will let my stops do the talking.