12/15/200810:16 PM Pacific

Zooming in on a 60 minute chart of Friday’s move up in the futures that continued into Sunday, I have a bias for 5 waves up, and 3 waves down today. Note how the move continued up to the bottom of the original trend line, and then reversed to ultimately find support at the 2nd Fan line. The first chart below shows clean ratios for 5 waves up and 3 waves down. The 2nd Fan line was breached but not broken. Note the intersection of c (1.618 extension of a) and the 2nd Fan line. On the second chart below you can also see that it was a .500 retracement level that ultimately held on a closing bar basis, at the Fan line. Ideally, for this count to work we should go up from here. I believe this is the highest probability. There is one other option at the end of this report. 60 minute wave count and Ratios of Friday’s move up

12/15/200810:16 PM Pacific

Retracement level of today’s move down

Moving the lens back out to the larger timeframe on the chart below, I am looking for any confluences with the Fibonacci extension pivots since the low, and we really only have one. It is at the previous high of (1), the 1:1 ratio of Friday’s move up from (2), the bottom of the original trend line further up the axis, and .618 off the low (2nd time). There is a very good chance we will pause or retrace here. Ideally, for the larger Expanded Flat thesis to play out, price will get to 958 without a significant retracement. If this is going to happen it should be in the next day or two. What happens if we go lower? I cannot find any probable patterns that go lower than the 11/21 low from here. In my analysis, if we are going to take out the 11/21 low, we have to go higher first. If we start off lower tomorrow, the second chart below is the most probable path for price. The lower price option is interesting because there is a confluence of the 3rd Fan line, a .618 Fibonacci extension of the move down from (1), a 1:1 ratio of today’s move down from 1, and, not shown, an .810 retracement down from Sunday’s high of 1. High probability we will bounce there if we head lower over the short-term, then work higher.

12/15/200810:16 PM Pacific

12/15/200810:16 PM Pacific

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