The monthly chart shows price with one day left in
August having made a lower high and lower low versus the July candle. Having
probed lower, price has thus far recovered the yearly pivot and is attempting to
regain the MY MA.
As mentioned in last week's post, the last two
multi-year lows have come just two candles after the multi-year high, but the
average of the last five MY lows has come between four and five bars after the
MY high. Given that we were overdue for the MY high to finally have been seen,
we are also overdue for the MY low's average duration. So with all of that
said, it is possible the MY low will be seen in September or October, but we
must be open to the possibility that the low occurred last week. The original
targets for the MY low were the MY MA or the yearly pivot, and price did test
those areas. With minimum targets met and the timeframe plausible for a MY low
to have been seen, we must look to the lower timeframe charts for evidence of
whether a MY low was made.
The weekly chart shows price last week with a
sharply lower high and sharply lower low but a higher close versus the prior
week. This "hammer" candlestick closed above the MY MA and many pundits have
declared it to have been the end of the correction. As explained above, this
could very well be the case, and price could have made a half-span multi-month
low last week on MY MA support, which will also mark the MY low. Thus far,
however, there is no evidence of that price is still not on the downside of the
multi-month cycle whose low is not projected until the first week of October.
Should price trade above the green MW MA and turn that average upward, we would
have evidence of an early turn in the MM cycle. As usual, the earliest evidence
will come from a lower timeframe chart, and the daily chart is where some
bullish clues can be found.
The daily chart shows price last week making a
Monday low and Friday high, classic price behavior in an uptrend. Price is
currently trading above the blue MD MA and today has seen that average turn
upward. While any decent bounce would have seen price trade above this average
(and this bounce has thus far fell short of a 62% retracement), should price
close today with the average pointing upward it will still be an indication that
price made a half-span multi-week low last Monday. While that would not be
evidence of price being on the upside of the MY cycle, half span shifts often
indicate turns in the larger timeframe cycle. Thus, a half-span MW low could
mean we are on the upside of the MM cycle, and the half-span MM low could mean
we are on the upside of the MY cycle.
Tomorrow will see a new monthly pivot which would
currently come in around the 1969 area. How price reacts around this new pivot
as well as around the MW MA will provide additional evidence of where we are in
the MW, MM and MY cycles. While price during the topping formation showed
little respect for the MW MA as support or resistance, I would expect it to
provide substantial resistance should price be on the downside of the MM and MY
cycles. Failure of that MA to act as resistance to price would be another piece
of evidence in the bulls favor.
The hourly chart shows price trading above the
weekly pivot and the blue MD MA, behavior indicative of price being on the
upside of the multi-week cycle. As mentioned above, however, I mildly discount
this evidence since any decent bound would seen price eclipse these areas.
Should price make a higher multi-day low, however, it will be a clear sign that
price is on the upside of the MW cycle. A multi-day high is past due and could
well have been seen on Friday. Price is in the timeframe to see a 24Hr high,
and if this high is made below 24Hr MA or daily pivot resistance it will confirm
that price is on the downside of the MD cycle. We will then see if the weekly
pivot/MD MA confluence area can provide support for a higher MD low to be made.
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