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I had an interesting email this week from a client – Naresh:
…from India and had been following your mails regularly.
I did attend the safety in the market course 5 day trading congress with Mr. David Bowden.
Considering your recent article , don’t you think that we are at a very strong resistance level of 50 % retracement of the total fall and the current up move is about to finish as we are very near to the time by degrees date as well
Shall appreciate your reply for better understanding .
Regards
Naresh
A good question and I thought I would share your and my views with our readership at large as I am sure it will have universal interest.
Firstly Naresh I must confess I have not done a Safety in the Market course although I do understand the basics. But I do plan to do the course in the coming weeks as Gann especially interests me.
But for now let us start with a retracement chart:
click to enlarge
We of course touched the 50% retracement back in early January and the mini retracement we experienced then was what I thought was the beginning of a larger pullback that we in fact experienced.
At the moment global markets have strong support and I am inclined to think it will sail past the 50% retracement level and head to 61.8% - the next key Fibonacci number.
Of course a 50% retracement is a more likely outcome with 61.8% a lesser probability. 61.8% would take us to about 5430 and that puts it in the Elliott wave five bands.
click to enlarge
Now some Gann enthusiasts may take a dislike to my use of the term ‘about’ but I am not inclined to such precision as markets are just not that predicable on a frequent basis. I would not dispute for one moment David Bowden’s impressive record in picking major dates and that is why I have decided to study his work further. But to use Gann in conjunction with Elliott.
With you having opened up this interesting question Naresh, I will review this again in the coming weeks – or months. I say months, as it could take some months before this scenario unfolds.
And by this point I would be expecting a major turning and this could be the one to be on board!
Enjoy the ride
Tom Scollon
Chief Analyst
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