Short

AMD: Is the bear ready to reemerge?

By SMLFinwave

Updated

Large corrective wave to the upside looks ready for completion. Please see posted chart below for explanation.

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To be safer, invalidation of the wave-c structure would be better at a break of 109.88.

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Invalidation of the wave-c has occurred. I am considering this a c-failure, and I am expecting wave-3 to commence.

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I am assuming we are currently on wave-4 (blue) of wave-c and need an additional wave to finish complete the 5 wave impulse. My short target is currently around 86 to be reached by 8/3. This will be subject to change as price action unfolds.

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If price drops below 117.08, it means there was a 5th wave failure and price would be on wave-3 (yellow) to the downside.

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This has been a highly complex corrective wave. I am unable to be certain of the count, which I have changed multiple times in an effort to find something that makes sense.

I can note a few things: first, I am pretty certain we are in a corrective wave 2. Second, it appears to be forming triangular action. Triangular action is usually formed at the end of a complex correction and it creates a structure referred to as a double three or triple three.

In our current instance, it is possible I have identified 2 flats separated by x waves, and the third structure is the triangle, which almost looks complete. We will see shortly.

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A blow through the trendline created at the wave-c in the triangle would invalidate this count.

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It appears the market is disappointed in a few of the tech earnings so far this season, so it could be the catalyst that moves AMD price action into wave 3. I am unable to find a suitable count for wave 2, but we can start to see the normal structure of the 3 wave corrective action on the chart.

I's not sure if we'll make my August 3rd target at 86, but I would be surprised if we don't start seeing some significant down days in the near term.

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At this point, I'm going to confirm this as the 1st wave of wave-3. We should be going into wave-2 tomorrow. Then waves 3-5 should follow into the next week and a half. This also tells me that wave-2 of the larger degree (yellow) probably finished at the 121.67 high.

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Current (rough) estimate of price and time, subject to change.

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Three distinctive waves have developed to create wave-2 (blue). If we haven't seen completion today, then it should definitely be early tomorrow. I'm estimating wave-3 (blue) to complete late Thursday/early Friday. The minimum target is 93.50 subject to wave-2 completion. If this is correct, the next 3 trading days should see some serious downside action. We shall see.

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I have updated the count. I have been suspicious of the downward impulse since the timing of it has taken too long. Once we didn't see the strong push down for wave-3, I knew the count had to be wrong.

Since then, it appears price action has developed into a large triangle in the "green degree". Therefore, wave-B (red) was not complete as I thought it was after the large impulse in May. Unfortunately for longs, it is still a downward count, with wave-B (red) completing at earnings via an ending triangle.

If this is a completion of a triangle, then the downward thrust should be intense and its minimum target is around 96 (100% of the longest wave of the triangle; in this case, wave-b of the triangle).

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See chart.

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The likelihood of price action consolidating into the apex of the triangle is high. This would be a non-limiting contracting triangle. Chances are there will be an additional triangle, within the bigger triangle, that develops wave-E.

If true, price action will see strong downside action after completion. It will just take a little longer.

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I have 2 possible scenarios. I prefer the 2nd scenario, as that allows me to purchase additional short position at a higher price since I was not expecting the triangle to finish on Thursday.

I can't discount the possibility of the 1st scenario since we did get a breakdown outside of the triangle even though it was for a small time period. This could have been a false break - but we should be ready for the possibility. We'll know because price will have a hard decline through the previous low with no rebound.

Both scenarios are bearish since my count is not allowing for a bullish continuation.
The 1st scenario will see a sharp decline on Monday, and the 2nd one will see that decline later on in the week or so.

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Speculation for wave-3 now that wave-1 looks complete at this morning's low.

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SMLFinwave

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