- September 18, 2011
- Posted by: Ramki Ramakrishnan
- Category: Euro
When we are trying to adjust our wave counts in a dynamic environment, it is important to be aware of the potential of an alternate count. This is why I had posted a second time on 12 Sep, hinting that we could get a rally to 1.3840 if the decline we saw to 1.3500 was an extended fifth. I urge you to revisit the first chart posted on 12 Sep and compare that with this one. Wave analysis is not a black box that gives you all the answers, but if you are alert to the possibilities, you can quickly hop off the wrong train and get on board the right one.
Typically, when we get an extended fifth wave, a recovery will be seen to wave ii of the fifth wave. However, extended fifth waves are also subject to a phenomenon known as a double retracement. (See my book Five Waves to Financial Freedom for details). We see that wave ii of the extended fifth lies above 1.4100. But given the current bearish stance, we might not get there directly. Don’t be surprised if we experience a deep pull back before the second retracement.