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Squawk / 23 May 2016 at 20:44 GMT
The OMXS30.I is possibly about to make a new strong directional move in either direction. The larger trend is down until proven otherwise but is the bounce off the Feb 11 lows over? In the chart below I have two scenarios, one bullish and one bearish. The bullish scenario is a longer term bearish abc structure but implies short to medium term movement higher, ideally in a five wave impulse. A daily close above 1351 in the near future would indicate higher prices. The rise should in this case ideally not last longer then 60 days from May 13.

The bearish scenario is one hinting at a very weak market with a short and not very impressive bounce given the previous decline. So far following the April peak we have one five wave bear swing lower that ended on May 13. If we breach this low at 1305 we might get to experience third wave price action to the downside.

Looking at internals in the index we are currently seeing industrial with relative strength and Banks and HM putting pressure...
1y
fxtime fxtime
Johan can I ask if the peak you show for Nov could be A ref thus we now have traced the AB and BC leg (completed March?) but are currently tracking the final CD move? To be honest I prefer your red line low.
1y
fxtime fxtime
Hmmm I seemed to have lost a typeset ....I did in the original text ask how this fits into your EW....as you exceed my knowledge on that area by a very long way :-)
1y
Johan Berntorp Johan Berntorp
Yes, it fits as I understand your picture but in that case we would see a three wave thrust lower which would mean we are in a messy move still attached to the Feb 11 lows. A clean EW swing should conclude with an impulse, which we have from the April highs. Another thrust lower should ideally be followed by yet another. However I would like to see such a termination line up with time and price too.
1y
Johan Berntorp Johan Berntorp
The five wave ending is also why there is a bullish scenario that could possibly play out, with ok time alignments. Enough to be carefull and not too one side biased in the short to medium term. I personally favour the red line too but can't get too muddled into an opinion.
1y
fxtime fxtime
Thx for the detailed response mate :-)

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