The Weekly Chart

Regular readers know that I have been counting the rally from the March 17 low as an “a-b-c” zigzag pattern. Today’s weekly chart shows how that (completed?) zigzag fits into the larger picture. Notice the Fibonacci resistance at the recent high as well as the medium term (blue) moving average.

However, I must keep in mind that the weekly chart is still on a technical “buy” signal. This implies that any move down will not make new lows. Therefore, if the zigzag from March is an “a” wave of a bigger pattern we will now see the “b” wave; which would deeply retrace (but not completely) the rally we just had. There is another possibility though: the zigzag will be followed by a shallower “x” wave retracement.

If we are now embarking on a “b” wave decline then for a roadmap I am thinking that the low comes in mid-August. That outlook means a continued choppy range bound market over the next few months.