Today's Support and Resistance levels:
S1: 126.72 R1: 127.53
S2: 125.99 R2: 128.00
S3: 125.47 R3: 128.58
Technical overview:
The break below our invalidation point at 126.03 is left with two options. The first is the entire five wave rally since 94.10 ended with the test of 131.12 and if this is the case we are looking for a large corrective wave 2 down to at least 118.73. Looking at the decline from 131.12 we can consider that there are impulsive characteristics, which would be what we are looking for in a simple zig-zag correction. The second option is that some kind of ending diagonal is developing calling for one more high above 131.12. We do not favor this option as ending diagonal is made up of five three wave moves; it does not fit this rally from 118.73. The reason why we are hesitating a bit and not calling the top is that the EWO indicator does not show any significant divergence, which we would normally expect at the end of a rally of this degree.
Trading recommendation:
Our stop at 126.00 was taken out and we will stand aside till the picture clears up.
