Not going to say about the present correction despite STI dropped to 3340 on 4th April 2018, a new low than the 3377 on 9th February 2018. Whether there is still some downside (the lower trendline), the concern that STI has moved below the 200d MA or other technical indicators indicating more downside, the case is closed for current correction as far as it is concerned. STI moving below 200d MA or any other technical indicators showing bearish last week can easily be reversed the next week. However, for Elliott Wave due to its rigid rules, it is practically impossible to be reversible. What Elliott Wave showing now is STI still yet to complete the cycle since 2009 and STI yet to break above 2007 peak. That is true fact and a clearly defined upside so why focus so much on present correction ?
The breakdown to 3340 last week did bring out a point that is one of the scenario mentioned in the last analysis has to be eliminated.
The above is the scenario that STI is doing a Intermediate degree Wave 3 extension of the 3rd wave. The fall to 3340 caused an overlap to occur as shown in the chart above. This will invalidate this scenario simply because wave 3 is an impulse way, any sub-wave will obey the rule of no overlapping and diagonal structure is not allow in wave 3.
With that scenario eliminated, what left behind as the highly possible one going forward is shown as the chart below, scenario 3 as mentioned in last analysis, Intermediate Wave 4 ongoing.
Intermediate Wave 3 completed at 3611 and ongoing correction is Intermediate Wave 4. There is some adjustment of Intermediate Wave 2 moving from November 2016 to June 2016. Without doing so, STI would have both Intermediate Wave 2 and 4 doing a combination correction and it is quite rare as both suppose to alternate each other. In moving Intermediate Wave 2 to June 2016, Intermediate Wave 2 will be a zigzag with a Fibonacci Retracement of between 50% to 61.8%. The Intermediate Wave 4, the present correction is a double-three combination with a Fibonacci Retracement of between 23.6% to 38.2%.
So far the wave count looks pretty logical and fit in nicely. The only doubt is statistically how Intermediate Wave 5 going to fit it in. Length of Intermediate Wave 1 is 420 (2960 - 2540), length of Intermediate Wave 3 is 881 (3611 - 2730) and that makes ratio of wave 3 to wave 1 to be about 2.1x. Not sure that really can be considered as extended length as it has yet to reach the magic figure of 2.618x.
Should Intermediate Wave 3 is extended, Intermediate Wave 5 cannot be extended and hence the length of Intermediate Wave 5 cannot be longer than Intermediate Wave 3. Under typical textbook case when wave 3 is extended, length of wave 5 would be same as wave 1. if that is so then starting from 3340, Intermediate Wave 5 will end at 3760. That figure is still below 2007 peak and a major concern is when Primary Wave 4 occurs that amount provides very little room to correct in order not to overlap Primary Wave 1. Hence, length of Intermediate Wave 5 has to be between 420 and 881. A length of at least 600 would ensure Intermediate Wave 5 hit pass 2007 peak (if starts counting from 3340) and have sufficient room for Primary Wave 4 to correct.
Should Intermediate Wave 3 is not extended, from the chart above it appears no extension sighted too then length of Intermediate Wave 5 would or would not be extended. If extended, length will be greater than 881 and that will have no issue hitting past 2007 peak and at the same time provide more than enough room to correct in Primary Wave 4. If not extended, then as mentioned above, length of Intermediate Wave 5 would have to be at least 600 to satisfy the 2 conditions.
It will be interesting to see how STI will be going forward after the present correction is confirmed to be ended, in particularly how 2007 peak will be broken and at what level will Primary Wave 3 ends.
