Overnight on Sunday, we hit a low of 1894 – and the rallied towards 1927 at the open. Right when you think the downside is down – there’s one last wave down towards that 1895 region.
Interesting to note that as you look at the green 1-2-3-4-5 below – they spread out further and further apart and the moves are larger and larger up and down (indicating elevated volatility levels).
The rally at 3:15 from 1897 towards 1922 was quite relentless — indicating a potential reversal to the recent selloff.
The pattern to the downside did not seem complete with the 3rd wave down that broke the overnight low of 1894 just a bit — but then it rallied back to 1910 (a 15 point rally) — followed by yet another drop. The size of that 15 point rally suggested the possibility of a truncated 5th. Indeed, that haappened — and once we got 2 strong green candles with conviction — the possibility of a reversal increased in terms of probability. But when that 3rd wave was coming down — it was opening the possibility of more downside. The hi 4th wave was the big clue.