Back Test Complete

Either the H&S pattern is about to break or, as I rather suspect, the back test is just about complete.  Note the bold, purple TL on the 60-min RSI (ignore the rest — too confusing to translate from the daily chart.)

As I suspected, the 60-min RSI gave us a decent reversal signal when it tagged the TL off the August lows (the lowest horizontal line.)  As we discussed in the earlier post, the key is whether we can close beneath the neckline, currently around 1364.  Don’t be surprised if we close right on it.

We more than tagged our first target — the .886 Fib level we talked about back on May 6 [see: So Far, So Good.] And, we bounced off the daily RSI fan line I suspected might create a bounce.

My gut is that it won’t be possible to stuff today’s plunge back into the “let’s pretend” box…too many H&S pattern completions, too many rational, reasonable, mainstream acknowledgements of the broken euro zone situation.

UPDATE:  8:45 PM

Another possibility that just occurred to me…  ewtnewbie points out that under EW theory we should see an a-b-c corrective wave as our back test after 5 waves down we’ve traced out.  I’ll buy that, though as most of you know I’ve long since given up trying to trade off EW.  I do like the idea, though, of another H&S pattern on the right shoulder.  Here’s how it could work…




Back Test Complete — 2 Comments

  1. I don’t know PW, that hammer candle formed today is a long legged SOB, but it is a serious hammer!  I see 5 waves down and am looking for an A-B-C back up to 1380 to 1390 before making the slide down.  Let’s see what tomorrow brings.  Thanks for the great forecasting and assessments.

    • Yep, don’t like the look of that candle at all from a bearish standpoint.  I’ll take your word on the wave count; I’ve long since given up trying to read those tea leaves.  Here’s another way the right shoulder might play out in a little H&S (above).  But, it only gets up to 1375ish if it’s to retain perfect form (not that it’s necessary.)  Maybe a gap up in the morning, just to suck people in…idk.  It’s a little tiring, trying to figure out how they’re going to try and screw everyone this time.