My preferred count is still that we saw the orthodox top on December 31 at 16,588.25 and we have since seen wave A of an expanded flat correction down to 15,340.69 and wave B rallied to 16,735.51 and we are now in the very early part of a impulsive decline in wave C, which will have a bottom below wave A. Ideally wave C will decline to 14,721 where wave C will be 161.8% of wave A.
Short term we have seen wave I from 16,735.51 to 16,397.46 and wave ii is currently unfolding as an expanded flat correction towards 16,551. Once wave C is in place we should see a powerful wave iii lower through important short term support at 16,312.66 confirming the impulsive decline scenario for a move lower towards 14,721.
As long as important short term support at 16,312.66 stays intact, we need to consider an alternative count, that would call for one last rally to slightly above 16,735.51 in wave e of an ending diagonal. No matter which count is correct, then the potential upside should be limited and a powerful decline should be seen soon.
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