Review Update 3/13/21: Taking another look at the pattern progression around UPRO / SVXY responses- there is a potential for a medium degree top to print sooner than we anticipated. What is under review is whether we are more likely closer to a wave 5 conclusion (yellow border) rather than the projection at ES 4400 zone. Check back for more on that potential.
Additional study- Observations have often indicated that leveraged instruments that do not suffer from large decays or extreme amplifications can frequently indicate clear intent in price pattern progressions. In our eagerness to count everything as impulsive in the current leg, we now see cause to question that approach. See very bottom chart for more details. Note that pattern indications support a seven wave corrective leg 'a' - 'g' about to conclude with 'g'.
original post:
Minor top could print as VXX enters 13.46 price zone. Either way it gets there should not be an issue. Using the leveraged instrument UPRO often provides a reliable 'tell' and the 90.04 price zone is a strong candidate for that critical level. Based on the size of the down leg, the lower gaps shown are within 'normal' fibonacci extension distances assuming the potential retrace is nothing more than that.
The label on the chart - 'LG 2.6 FM W2 LO' at 90.04 zone refers to this target level as a long fib (0 origin, -1.6 bottom , +2.6 top) extension calculation ratio from the wave 2 low price (-1.6) in April 2020. That ratio combination is frequently assigned to predict target levels especially ones that are extended such as the leveraged targets we see with UPRO so that zone will be watched for a reaction whenever it hits together with VXX low target preferably. Subject to live adjustment as necessary.
Orange arrow route will cause VXX (volatility) to rise and perhaps close gaps shown in UPRO. After that VXX may promptly descend to hit the low target as UPRO hits an upper target- (perhaps 90.04 zone which should be a strong attractant). Preferably there will be a daily negative divergence on NYAD MACD which is lacking currently.
(the following paragraph now has an alternate analysis that may supersede this- see first two paragraphs at top together with the very bottom charts)
Second chart is a reminder where we could be medium term using ES futures daily projection. If the analysis is correct, a high degree wave 5 (yellow border) could be where we are and within that, it could still be printing an expanding wave 4 (brown border). Interestingly- pattern action in a wave 5 can often zig zag until it reaches it's target and can appear similarly to a wave 4 in it's overlapping tendencies. This is often the nature of final action in a leg at any degree which could be a result of sellers exiting and late buyers entering less decisively. Whatever the underlying reason, we have observed this to be the case in a wave 5 more than half the time so an expanding wave 4 (brown border) that prints below wave 1 (brown border) top is entirely acceptable although probably not to a purist labeler.
See Critical Long-Term Review Here
The bots will flag here when they see a top. (1/25/20, 2/20/20, 4/9/20)
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