On the left hand, we have a textbook case for technical analysis, thereby looking back it's always easy to see.The top was formed by a classic head-shoulder top pattern and the head confirmed with a weekly 13 count. The waves unfolded in a 5 wave count. Wave 1 down from 250 to 220 had a 30 point magnitude followed by a 2/3 corrective wave 2 up. wave 3 down which usually has the biggest magnitude. Wave 3
had the Fibonacci factor of 1.6 times of wave 1 of almost 50 points and had the lower magnitude correction of wave 4 with roughly 38% up.
Now we are in wave 5. We should find its low in the 180 area. The worst case would be an extension to 165/70 to match the magnitude of wave 3, but less likely. This shows that a severe down-leveraging leg comes to an end. That refers to hedge fund leverage more than to the unwinding of to big balance sheet of banks, which will take years.
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