A road map which may guide us going forward during this correction that we have been in for a little while.Having that bearish forecast target is a cause for concern which can not be ignored at my end.
This forecast target, as shown on the PnF 1 Box chart suggests further declines from current levels. This said, we are likely to see short term counter-trend rallies( up moves) which will be corrective in nature if the daily short-term charts are examined. One of which (counter trend short-term daily move) may well occur soon as the market is oversold and appears to be finding short term support….
Some of us may have seen a similar PnF chart of mine earlier. Box sizes are slightly different as the software calculates it. But the targets are similar. Please also bear in mind the box size of 58.55 points. Therefore, being out by a box or two would still be considered as a reliable forecast.
To the PnF chart followed by the monthly candle chart below. Monthly chart is what I am using as a road map where the price is now trading below the 12 period moving average. Both charts are courtesy of StockCharts.com
Please check the post GFC major correction x 2 as shown on the monthly chart and try and read the current correction in a similar way.
Has the Fibonacci Golden Mean Retracement Ratio of %61.8 played any role in the past two corrections ? Answer is on the chart. Can we expect a similar behaviour again. Why not ?
Fib. Golden Mean retracement suggests a forecast target of 5390 (approx.) at present. This coupled with the PnF forecast target suggests support line of the long term channel is likely to be tested over the months ahead.
Here is the Monthly.
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