Dow - Major Wave (V) is confirmed

Hangzhou West Lake

Hi I am back from my holiday in China. In the last few days, S&P has broken its lower resistance line as shown below. So, it is clear that major wave (V) has been completed. Once the lower support line is broken, the wave 2 scenario is no longer there. The end of sub-wave v is the completion of major wave (V).

With a 7.3% pullback with magnitude equals that for major wave (II), 7.4% and major wave (IV), 7.6%, the best and the most optimistic scenario is a diagonal ending triangle with the formation of major wave (VI), (VII), (VIII) and (IX) as shown below.



The second possibility is the ending of the mega wave I at major wave (V) to be followed by a triangular A-B-C-D-E side way formation between two parallel lines or within a contracting or expanding wedge pattern.



The most pessimistic scenario is a zig-zag A-B-C formation as shown below.

A zig-zag formation is most damaging with a sucker wave B rebound before the onslaught of wave C. Most damaging also means one can have an opportunity to buy stocks at a cheaper price at the end of mega wave II before the starting of mega wave III.