hard · Elliott Wave Theory
A stock completes a clear 5-wave impulse. You observe that at the peak of Wave 3, the 14-period RSI reached $82. At the peak of the recent Wave 5, the price is higher, but the RSI is at $71.
What does this momentum profile suggest about the current market position?
- Wave 3 is actually extending, and a massive rally is still ahead.
- This indicates a bullish continuation signal as the RSI stayed above $70.
- The impulse is likely complete, as negative divergence is a hallmark of Wave $5.
- The market is in a leading diagonal where overlap is more important than RSI.
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