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Summary

  • Long term outlook: Up
  • Medium Term Outlook: Down
  • Short Term Outlook:  Down
  • Revision Point: Break above 1260
  • Potential Medium Term Targets: 680 and lower
  • Preferred Strategy: Take shorts, with tight stops.

The selloff during the last week leaves us with the possibility that the move ending on March 03,’10 high (1045.10) was the end of wave 2 of  the bigger 3rd wave and the market is now  in the making of wave III.3. According to this situation, it seems that wave (i).III.3 has already completed on March 12,’10 low (1097.90), after which wave (ii).III.3 was formed on March 17,’10 high (1133.35). This week we expect the pair to be dragged lower by one of the longest sell off awaited and thus new lows. This sell off, shall be marked as wave 1.(iii) and should be very impulsive in terms of price, as compared to any other decline in the recent weeks.

However, the alternative scenario leaves us with a completely different scenario. According to this situation there is a possibility that wave 2 of the bigger 3rd wave marked as ii on the charts hasn’t completed as yet. The first part of the wave was an expanded flat ending on March 03,’10 high (1045.10) which is marked as A, after which the market moved lower to form the second leg of the correction, in the form of a zigzag, ending March 25,’10 low (1086.05). This week should see the market pull up to complete the C wave of the correction, while staying below January 11,’10 high (1161.75)

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