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Advanced Technical Analysis - XBD update



Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.


We are updating our XBD from August 17th. At the time we suggested that a 4th wave corrective bounce from the lows on 7/19/04 was taking shape that could top somewhere in the "124+/-" area before turning back down in the dominant downtrend toward 110/112 at a minimum. That analysis stays the same.

At this stage, the 4th wave corrective bounce we have been looking for is nearly complete: hourly momentum is diverging, hourly Demark trend exhaustion indicators are registering today (as is a daily Demark also), and a nearly completed "3" wave bounce from the 7/19 lows can be seen. The only topping indicator that we like to see that is not present is the fact that the A wave up from the 7/19 lows to the 7/21 peaks is not yet related to the C wave up from the 8/6 lows to today's peak by Phi or its derivatives. If prices were to reach 126.10 then wave C would equal 1.382 times the size of wave A.

So if prices have not yet found a peak, then we could expect the 126.10 price point to act as stiff resistance. Only a move above 128.55, the peak seen on June 25th, would invalidate the analysis for a move to new lows immediately. We would then be forced to stand aside and reassess the larger "count" down from the January peaks. Otherwise, the analysis suggests a possible decline in the XBD index from current prices, unless levels surpass 128.55, for a move to new annual lows in the 110-112 area at least.

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