Yesterday, I was expecting a C-wave up, but then after I posted the chart below from yesterday, what we got was some funky action in the 1880 region — not typical of a C-wave. Still, we rallied over 1900 today.
Notice for Jan27, there was some funky action in the region. We did go over 1900 as I expected, but it was short-lived and quickly reversed at the Fed decision. When I see funky action – that make me think of a mini b-wave – and then the rally up over 1900 forming an a-wave. The Fed decline would have to be a b-wave –this is the only way I can make sense of it if we are to get a full wave IV up.
The alternative is that IV completed there at 1910 – and we are going lower — but something about the pattern doesn’t seem right. It’s unusual to make a breakout over 1900 and then reverse that fast. So for the time being, I’m leaning towards the pink count.
Trades were both enormously positive going into the Fed with the rally up – but then most of it went away by end of day. However, trades are still positive despite the large, unexpected drop. We will need more information tomorrow to help us decide whether to hold for expiration or exit early.