This was where the market went outside the white line on the downside. This equates to 5x stretch from the mean (414 EMA H&L on the 30 min, aka the Green River).
You can see that there was a clear thrust that ended up making a 9.3x stretch, which is very high by historic standards.
They kept on attacking it and managed to push it below the white line on 6-7 occasions at least.
There was a move to the other extreme next, but price stopped dead at the 5x white band.
The counter move on the downside made 3 distinct attempts at the 3x mark (purple band), but could not muster it.
Next was 2.5 stretch on the upside and move less than 2x on the downside.
At this point you must see that you are dealing with a pendulum here.
Here we are currently:
Volatility started expanding – to the upside first. There was a 5.9x print already and some divergence, but we have not seen what was to happen if price is going to slide below the 5x mark again.
I think if this move is a Wave 3, it may have already peaked. A Wave 4 should get closer than the lowest point of the Wave 3, which was coming off the Upper Guard Rail (1x stretch). We should see a mean reversion next, maybe even an undercut to the Lower Guard rail before a Wave 5 up. This new Wave 5 should stop at the 5x white or a bit before.
The gap up over the weekend really threw me off. I was keep on trying to rape the chart into a Wave 5 up, but since the current structure seems to have ended in a temporary weakness at a No Break Extension, and there is nothing looking like a Thrust, I must acknowledge the possibility that this is not s C leg, but a Wave 3.
Lastly – sorry for the zoom, but since the week opened, the market “stayed outside” of both 109-pips markers, and this is typical of a channeling market. It is always the very chart that you currently aren’t looking at that seems to hold the key.
I expect a move back to the low .99xx region to find new footing.