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The Market Reached its Ideal Fibonacci-based Levels
In a standard Fibonacci-based impulse pattern, the third-of-a-third wave, in this case (red) W-iii of (black) W-3, tends to target the 100-123.6% extension of W-1, measured from W-2. The fourth wave often returns to the 61.8-76.4% Fib-extension, followed by a fifth wave targeting the 138.2-161.8% extension to complete the more significant third wave. In this case, the target zones are $6121-$6738, $5498-$5117, and $7122-7746, respectively. So far, the SP500 has reached $6147 and $5504, close to the 100% and 76.4% extensions, off by only a few tenths of a percent point.
Although in this case, the (red) W-iv of the black W-3 should ideally target the 61.80% Fib-extension because the W-iii reached the 100% extension, it is not necessary, since 4th waves often retrace 23.6-38.2% of the prior 3rd wave, which means the 76.4% extension at $5498 suffices. Besides, we can now re-address the “big miss” of the index by not hitting $6260 and instead peaking at $6147. It would make more sense that it was an irregular b-wave top of an expanded flat wave-iv correction. See Figure 3 below. In such a correction the W-b is larger than the W-a, and the c-wave is even longer.
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