Ever wonder what EXACTLY is being corrected by a market decline? Pundits will argue about magnitude of decline to fit definitions like "correction" or "Bear market" by distinction of 20%, more or less. But what is being corrected, beyond just prices being too high? This week's chart delineates earlier market increases to reflect WHAT is being corrected in context of prior advances. You can attribute whatever cause to those advances, but simple fact is they occurred and will be corrected.
I've indicated a progression of levels as targets for correcting earlier price advances. Each level becomes a potential target as the entire decline cascades. Starting with the current decline the upper boundary is 2495 (green) and lower is 2322(yellow). The Butterfly's projection is within that area and the "C" wave (Red) targets the lower level. I refer to this area as the "Correction area for Wave since 11/2016." It may have relevance to the 2016 election followed by adjustment with this year's mid-terms. As a technician that simply makes for a nice story and does not shape my analysis.
It wouldn't be unusual for a decline of that magnitude to see a contra-trend bounce (upward), but then further decline. A decline to the area of 2115 (orange) - 2322 (yellow) is not out of the question and is indicated by those upper/lower boundaries. The possibility is based on correction of the entire upward advance since 2009 referred to as "Correction area for Wave since 2/2016." Presumably a narrative would form around whatever relates to the advance since then. That could be global Central Bank tightening, Debt levels, Trade wars, who knows....? My technical analysis is not formed by whatever is attributed as the cause.
Related Fibonacci levels are shown along with guidance from MACD and PPO to assess measured targets and magnitude of movement.
I've indicated a progression of levels as targets for correcting earlier price advances. Each level becomes a potential target as the entire decline cascades. Starting with the current decline the upper boundary is 2495 (green) and lower is 2322(yellow). The Butterfly's projection is within that area and the "C" wave (Red) targets the lower level. I refer to this area as the "Correction area for Wave since 11/2016." It may have relevance to the 2016 election followed by adjustment with this year's mid-terms. As a technician that simply makes for a nice story and does not shape my analysis.
It wouldn't be unusual for a decline of that magnitude to see a contra-trend bounce (upward), but then further decline. A decline to the area of 2115 (orange) - 2322 (yellow) is not out of the question and is indicated by those upper/lower boundaries. The possibility is based on correction of the entire upward advance since 2009 referred to as "Correction area for Wave since 2/2016." Presumably a narrative would form around whatever relates to the advance since then. That could be global Central Bank tightening, Debt levels, Trade wars, who knows....? My technical analysis is not formed by whatever is attributed as the cause.
Related Fibonacci levels are shown along with guidance from MACD and PPO to assess measured targets and magnitude of movement.