Tuesday, 5 May 2009

Wave 3

Wave 3 is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts.

Scenario 1: today close below opening index 2056, tomorrow gap down (fulfil evening star);

Scenario 2: close near day high again, resume uptrend, target 2400.

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