First lets take a look a this long term picture above. I have shown it before, and as can be seen, we are currently testing the last Fibo-fan suport. We saw a test of this suport in late 2008 and in early 2009 and both time it held firm, so this a support that has great importance.
Taking a step down the time frame, we can count a clear five wave decline from 151.41 as black circle wave 1. When this fifth wave down is done, we can expect a multi-week rally towards at least the red circle wave 4 top at 138.17 in black circle wave 2.
Taking an other step down the time fram to the 240 minutes chart we can count wave one-two-three down in red circle wave 5. wave 4 problably finished at 134.94 and wave 5 down is under way.
There are two important things to notis.
1. Wave 4 is not alowed to break above 135, as wave 4 then would enter into the area of wave 1, which is not allowed.
2. Wave 3 became smaller than wave 1, which tells us that wave 5 can't break below 131.90 as that would make wave 3 the smallest wave, which in not allowed under the Elliott Wave Priciple.
Looking at the two corrective waves - wave 2 and 4 we can see that wave two was a flat, which due to the priciple of alternation should make wave 4 a zig-zag, which we have seen. A break below 133.45 will confirm that wave 5 is taking shape.
As a five wave decline can be counted one should be ready to accept a bottom soon and a wave 2 correction.
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