Wave Theory Predicts A Stock Market Crash In 2012

A fall from 2007 highs down to 2009 March lows unfolded clearly in impulsive structure, which we know is indicative of a trend. As such, we are very confident the larger trend has now turned down, especially after only 3-waves of recovery into 1370 region; exactly for 78.6% retracement of previous impulsive fall!

In fact, even a fall from this year’s high unfolded impulsively, labelled as wave (1) followed by wave (2) corrective pull-back, which will look for a top around the 1300 area.

Notice that we are also monitoring a huge head and shoulders pattern, which is about to complete very soon! Right shoulder is wave (2) on the chart, which is in the final stages!

However, only price can confirm our bias, so we still need to see 1150 break, before wave (3) accelerates to the downside!


This post by Gregor Hovat was published at Forex Crunch.