This chart uses an extension from the 2007 highs to the 2009 lows. As you can see if you'd have drawn this to the point, and maybe some have, you'd have easily seen all the important resistance points.
It's been bothering me that last year's highs don't really make sense...Unless you do something radical and make a point way out in the future, in which case, as you can see, it's a 50% retrace of a far higher future price which happens to already line up nicely with some other major resistance points. It's also a .236 using a range of the 2007 high to 2009 low. Again we've entered 2011s congestion area - caught between two Fibs. If you look back price has gotten caught in this area numerous times. 9 months in 2008, all of 1999, and a good part of 2001.
There is a similar pattern for price between 1335-1500.
Notice that price has gotten stuck between 1220 and 1335 before and after the 2000 and 2007 peaks.
We already got stuck there last year - based on this previous behavior, it's highly unlikely we get stuck exactly here this year again. Price hates being stuck.
I think it highly likely we make new highs especially since we are reaching a news flow crisis point which will be resolved soon. I think it highly likely that we get briefly stuck in that upper range later this year and then crash into 800-950. Looking back there's a more-or-less 5 year cycle to getting stuck here. Check out 2008. As far back as '91 and '86 and '81 there is a similar pattern of a low bear market range. A higher range is also possible, in the 1000-1200 area. There is a similar pattern.
It is highly improbable, given the macro-economic situation, that new highs and a consolidation before pushing higher are possible.
Of course there's still the possibility that Greece doesn't get resolved this month, which I think would take us back down to 1000-1100 very quickly. This just doesn't feel right to me at all instinctively and based on Hurst cycle analysis. A highly analogous situation is the December 1968 high, where there was a 10% decline and then one more stab to a lower high. I fancy a similar or higher high though, because this one was rather pathetic. Tops take a while to form, and according to this analysis, price wants out of this zone, and fast.
As for the very high point I'm plotting that second set of Fibs off of. Patience. All things in good time...
Edited by sluzbenik1, 26 May 2012 - 10:55 AM.
