Yesterday a MPEL correction was analyzed. Today, further upside targets will be entertained in the event that more upside is in play before a correction begins.
As previously stated if price motion is not contained by the recent 7.88 high, more exact downside targets can not yet be calculated for certain. Todays trading so far has shown a two cent break of this level, not substantial enough to call a break, with large bids yet lower prices.
There are two near term upside price target scenario that could fit into the prior analysis for correction.
First on a monthly chart, the internal wave 3 of 3 (calculated from the wave 2 price zero point of 3.26 to a possible wave 1 internal of parent wave 3 at 5.68) calculates to 8.67.
This internal wave calculation differs from yesterdays projections of internal wave counts because it is calculated from the parent wave 2 price zero and the later projections were made from the price zero point of parent wave 1 at 2.27.
The accuracy of a parent wave count is not always as precise as the internal wave counts, as these are more present time calculations. Real time price motion can be more determinative to price discovery than past, obviously, but this is more dependent on current market dynamics than the perceived lack of accuracy of initial projections.
The previous analysis of the 7.20 price target is still being viewed as pivotal to the wave 3 MACD projections, however, the divergence between this wave 3 and its wave 5 MACD may not occur at the 7.88 level if higher prices are seen.
The second scenario revisits the importance of the 7.20 price target as a wave 5 to a certain degree. Remember that this internal wave price point was derived from 3.26 on 12/31/09 to 4.35 on 1/8/10 and was the initial internal wave 1 of the parent wave 3 recognized on a daily chart.
Because this was an important wave 5 projection is why a flat or triangle correction was expected in the prior correction analysis.
The gap open that occurred at the 7.20 price high on 1/11/11, a price point that would have completed the B wave of a flat correction, could also indicate that the expected correction is now irregular.
In an irregular correction the B wave of an ABC correction exceeds the prior wave 3 or wave 5 price high before the C wave target has been reached.
If the 7.20 wave 5 price target was to be an irregular correction, then the wave B price target of this correction would project to 8.50.
These two short term scenario upside targets could be in play if MPEL continues to trade higher through its monthly internal wave 1 of parent wave 3 price range. These price targets would represent a 9-10% difference to the monthly target of 7.80 shown in this chart.
Longer term upside targets are expected, but more likely after a correction has been seen.