This keeps you mentally flexible and able to quickly react if an unexpected scenario occurs.
On 9/15/17 I posted an SPX intra day alert that an - Triangle ( EDT ) appeared to be nearing completion with a target zone in the SPX 2499.30 to 2500.30 area.
This target has been achieved and we can now focus on the downside target, which is this case is the point of origin for the EDT- the wave "iv" low at SPX 2491.
EDT's usually have a very sharp reaction in the opposite direction of their trend. If complete this EDT took two trading days, a move down to 2491 could be accomplished in
just one or two trading hours.
Please see my prior posts about the extreme condition of the SPX . If there's a sharp moved down to 2491, it could be the start of a much larger move down within the next
thirty four calendar days. I will have more about this in future posts.
On 9/15/17 the SPX reached its highest tick of the day very close to the end of the trading session. Normally when this happens
it is , and implies continuation of the bull trend immediately after the open of the next trading day.
This has not been the case in recent trading days. Note the closing highs on both 9/12/17 and 9/13/17 the next trading day the SPX gapped down.
I believe this unusual activity is yet another sign the bull trend is dying.
If the EDT is complete, there is a high probability that the SPX will gap down on the open of 9/18/17.
Also note that the EDT overlapped the upper - this is a very common characteristic of EDT's and it strongly implies the EDT is complete.
In rules the third wave of any five wave impulse is never the shortest wave. The supposed wave "iii" of the EDT is shorter than wave "i".
If wave "v" exceeds the length of wave "iii" then the structure is invalid and opens the door for higher prices. Use the point where wave "v" exceeds wave "iii" as the stop loss for short positions.