After reaching 101.00 in the beginning of November, United Technologies Corp. stock started declining again. It has been trading near the 93-dollar mark recently, but should we expect more weakness or the bulls are about to return soon? The chart below might help us find the answer.
As visible, the top of 101.00 marks the end of a nice five-wave impulse. This means the current pull-back is just the three-wave correction, which naturally follows every impulse. It appears to be close to finding bottom. So, the 5-3 wave cycle would be complete soon. According to the Elliott Wave Principle, we should expect prices to continue in the direction of the five-wave sequence – to the north. Wave (C) has the potential to take United Technologies stock above 101.00. But why are we speaking about wave (C)? Why did we mark the cycle (A) and (B), instead of (1) and (2)? The daily chart below will tell you why.
Because there is a larger impulsive decline from 124.41 to 85.47 on the daily chart. Therefore, the recovery on the hourly chart is just a part of the (A)-(B)-(C) correction to this impulsive sell-off. So, we are talking about different degrees of trend here. The trend might be bullish on the hourly chart, but it is bearish on the daily. Once wave (C) to the upside is over, the bears could be expected to grab the wheel again. United Technologies stock may see higher prices soon, but investors should not be misled, because the advance is likely to be short-lived.
