Like mentioned in previous analysis (refer above link), STI rebounded on the week started 12th February 2018 as according to what Elliott Wave predicted. However, the pattern for this correction (corrective wave (ABC or WXY) for Minor degree or wave 2 for Intermediate degree) is yet to confirm. At the moment the possibilities are :-
1. simple zigzag (A-B-C)
2. simple flat (W-X-Y)
3. triangle (A-B-C-D-E)
4. combination -- double three, double zigzag, etc (W-X-Y)
IF we are treating this correction as a simple zigzag and the development so far (till 19th February 2018) somehow match this pattern very closely and resemble that of a classic textbook pattern.
Above chart shows a classic textbook case for a corrective wave (A-B-C) with respect to Fibonacci ratio. Now we look at STI chart from the beginning of Minor degree wave 5 (end of Minor degree wave 4) till now.
In the classic textbook case, length of wave A is either 161.8%, 100%, 61.8% or 50% of wave 5. In STI case as indicated by the black Fibonacci retracement, wave A stopped at very near 61.8%. In the classic textbook case, length of wave B is either 50% or 61.8% of wave A. In STI case, looking at the blue Fibonacci retracement, we are close to the 50% retracement level and could even move towards the 61.8% level (3,521) -- both the yellow-colored region, after the close on 19th February 2018. Another to take note is the declining volume that we have been observing for the past few days of rebound. That fit well to the characteristic of wave B -- lower volume than in wave A.
Hence, IF this correction is a simple zigzag of the form A-B-C, STI could be reaching wave B soon or already hit on 19th February 2018. Thereafter will be the resume of the down wave C. The classic textbook case states the length of wave C is either 100% or 161.8% of wave A or 161.8% of wave B. In STI case, that will bring it down to near the 3,200 level or lower as described in the previous analysis (refer above link).
However, if this correction is not a simple zigzag pattern then the above will not be valid. Either way, to wait for the next Intermediate wave 3, one must have that holding power and able to stomach the downside risk for the time being.
