Combined with earnings worries, inaction by the BOJ and a weak GDP release for Q1, the market decided to take a widely anticipated breather.
The events described above led to a 5-0 pattern which gave us the test of 1950 and a cypher pattern (sloppy) which typically fails after retracing 62% of the C to D line. This would put us in the 88/89 area where we have seen failure before at point A denoted by the highest dotted red line.
This, of course, assumes breaking through the 2084 area which will be no mean feat and also a level to watch for a failed retracement. It's also assuming staying below a higher developed channel line.
A failure at 88/89 should take us down to 38/40 where there is a floor of solid support and very near the 50 DMA located at 2033.
The events described above led to a 5-0 pattern which gave us the test of 1950 and a cypher pattern (sloppy) which typically fails after retracing 62% of the C to D line. This would put us in the 88/89 area where we have seen failure before at point A denoted by the highest dotted red line.
This, of course, assumes breaking through the 2084 area which will be no mean feat and also a level to watch for a failed retracement. It's also assuming staying below a higher developed channel line.
A failure at 88/89 should take us down to 38/40 where there is a floor of solid support and very near the 50 DMA located at 2033.
Note
For your own benefit, remember than harmonic patters do not exist in a vacuum and I firmly believe understanding the reasons behind their formation are as important, or more important, than the pattern itself.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.