Often we, market analysts, over-analyze the market. Every scribble is, by every pundit, given heavy weight. But, do we really need to? Nah, let’s take a step back and look at the market since the March 2009. What do you see: a trendline connecting the 2009 low with the 2011 low (Primary II): the blue Baseline. Simple. This trendline can then be copied and moved to the 2011 high (Primary II). Voila and you have your (very) long term trend channel. Simple. Darn simple.
(click to enlagre)
Next, is the black Baseline. It is the 2nd most obvious trendline since the 2009 low. Look how price has adhered to it. Beautiful. Simple. Copy this trendline, move it lower, and it connects the Primary II low with the recent October 15 low. This is the next lower degree Elliot wave channel. Simple. Darn simple.
Price has been able to move above the upper blue trendline since the past year, and mostly stay above it, but has not been able to move above the upper black trendline since the summer of 2011. If it can do that, sustained, then (much) more upside is ahead. If it can’t, I expect it to fall back to the lower blue baseline! Simple. Darn simple.
For now, even as long as price is inside the black EW Channel, the trend is UP. That’s really all there is to it. Simple. Darn simple.
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