Harmonic Bat + 5 wave impulse down
Updated
Ok, I just finished building this, now let me see if I can remember it well enough to explain it, lol. ;)
It starts with the harmonic bearish bat. Harmonics are about Fibonacci confluence and there are 4 fib rules to a bat.
1. B is 38% or 50% of XA. 50% is more reliable.
2. C is 38% of AB.
3. CD is the magical 88% of XA and/or 1.61 or 2.61 of AB.
So far, we have a bearish bat. There are 3 price targets. 38%, 50%, and 100% of AD, labeled in the purple box. Sometimes, profit can extend to 1.61% of AD.
Next, it also looks like we possibly have an elliot 5 wave impulse down, which so far fits tightly around the "D to profit" trend line. The 3rd wave down lands right in the sweet spot of two of the targets for the bat. I'll be taking some profits there. We also don't know if the FED and/or Congress will step in around this level. In March and April SPX was around 2400 - 2700, when money starting flowing back in from both sources. I'm fearful of a bounce in this area coinciding with more fed action and will likely take most profit here, and very carefully play wave 5 down. Small sample size, could be coincidence. I think the Fed is too calculating for coincidence though. However, they can't keep propping it up forever either.
Some other stuff:
- Today we retested twice and were rejected twice (so far) from the upper channel trend line we have been in for April and May of this rally.
- We weren't able to close the gap so island top reversal still in play.
- The island top occurred right at the back-test of the 2018 bubble line which we have so far aggressively been rejected from.
- We have the longer 11 year bull line just below at around 2700. This could be a bullish turnaround point if we bounce off of this line, if brrrrrr, etc. This could complete the Bat. To hit deeper targets, we need to slice through that line, maybe back-test (in the wave 4), and then head down further to 2475.
Me thinking out loud and possibly over analyzing (may be more confusing than helpful so feel free to skip):
- It's a little tricky because profit taking for the bat is above the 11 year line, and in order for the back-test to occur in wave 4, wave 3 needs to finish below the line, extending past the 38% and 50% profit zones but not far enough to reach the 100% zone. We know harmonics and waves aren't precise, just guide posts. Just keep this in mind. I'm happily open to any feedback, questions, etc.
- I suppose wave 3 could finish in the profit zone, and then wave 5 takes us through the 11 year line, but that doesn't leave a lot of room for a back-back test. Maybe we test it after completing wave 5.
- Lastly, because I started my A for the bat higher than March lows, I don't know if this means the larger A of ABC is at the bat A or at the lows, hence the two As and two Cs. (March lows are a 38% extension of my X(bat)A).
Thank you for reading. This is not trading advice, just the working model I am following at this point. Happy trading and good luck!
It starts with the harmonic bearish bat. Harmonics are about Fibonacci confluence and there are 4 fib rules to a bat.
1. B is 38% or 50% of XA. 50% is more reliable.
2. C is 38% of AB.
3. CD is the magical 88% of XA and/or 1.61 or 2.61 of AB.
So far, we have a bearish bat. There are 3 price targets. 38%, 50%, and 100% of AD, labeled in the purple box. Sometimes, profit can extend to 1.61% of AD.
Next, it also looks like we possibly have an elliot 5 wave impulse down, which so far fits tightly around the "D to profit" trend line. The 3rd wave down lands right in the sweet spot of two of the targets for the bat. I'll be taking some profits there. We also don't know if the FED and/or Congress will step in around this level. In March and April SPX was around 2400 - 2700, when money starting flowing back in from both sources. I'm fearful of a bounce in this area coinciding with more fed action and will likely take most profit here, and very carefully play wave 5 down. Small sample size, could be coincidence. I think the Fed is too calculating for coincidence though. However, they can't keep propping it up forever either.
Some other stuff:
- Today we retested twice and were rejected twice (so far) from the upper channel trend line we have been in for April and May of this rally.
- We weren't able to close the gap so island top reversal still in play.
- The island top occurred right at the back-test of the 2018 bubble line which we have so far aggressively been rejected from.
- We have the longer 11 year bull line just below at around 2700. This could be a bullish turnaround point if we bounce off of this line, if brrrrrr, etc. This could complete the Bat. To hit deeper targets, we need to slice through that line, maybe back-test (in the wave 4), and then head down further to 2475.
Me thinking out loud and possibly over analyzing (may be more confusing than helpful so feel free to skip):
- It's a little tricky because profit taking for the bat is above the 11 year line, and in order for the back-test to occur in wave 4, wave 3 needs to finish below the line, extending past the 38% and 50% profit zones but not far enough to reach the 100% zone. We know harmonics and waves aren't precise, just guide posts. Just keep this in mind. I'm happily open to any feedback, questions, etc.
- I suppose wave 3 could finish in the profit zone, and then wave 5 takes us through the 11 year line, but that doesn't leave a lot of room for a back-back test. Maybe we test it after completing wave 5.
- Lastly, because I started my A for the bat higher than March lows, I don't know if this means the larger A of ABC is at the bat A or at the lows, hence the two As and two Cs. (March lows are a 38% extension of my X(bat)A).
Thank you for reading. This is not trading advice, just the working model I am following at this point. Happy trading and good luck!
Note
1.61 extension of E places us as around SPX 1990 around August.Note
I'm not feeling confident this is going to play out. We're still in the rectangle from last week. IG sentiment is bearish with 68% net short, and the bull flag from last week still seems in play making me think we may launch up tomorrow. If we get above and stay above 3160 new targets would be 1. 3186 then 2. 3330. There's a chance this sideways action could lead to a downward launch but the bull flag seems more obvious than the short-term bear case at this moment. I'm on the sidelines for now.Trade active
Looks like this bat is still playing out, along with the 5 wave impulse down. Within that, there is a smaller 12345 where we are currently at the wave 2. I suspect we trace up to 3076-3091 tonight before turning around. Could be a big gap down tomorrow, depending on how fast it moves overnight once it reaches those retracements. First target: 2880, then a quick bounce for wave 4, and back down.
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