After a very negative day on Wednesday we turned right around and had a very strong Thursday, which was a downtrending price bar with a higher close.Today’s chart shows what I call the “medium term” price pulse. Previously I showed the short and intermediate term view. The medium time frame shows one complete pulse (made up of the six pulses A-B-C-X-Y-Z) from August 2007 low to the recent January 2008 low. Note that in between was the all-time record high of October 2007 which was the end of the “A” pulse.
This is what Tony Plummer has to say about this formation: “A short-term sell signal is triggered as the x-wave falls below the bottom of the B-wave. However, the subsequent y-wave rally may abort the signal by rallying back above it; …” and “A longer-term (or regenerated) sell signal is given when the z-wave penetrates below the bottom of the x-wave.”
We are now in the next price pulse cycle on this time frame with the A-pulse now developing. The first price pulse “buy” signal can only come when the C-pulse rises above the A-pulse peak after a retest of the recent Z-pulse bottom by the B-pulse. This is just more emphasis on my position that a retest of the January 23 low is still required.
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